5 unchanged sentences
We are exposed to changes in the level of interest rates and to changes in the relationship or spread between interest rates.
−Removed: Our primary interest rate exposures relate to our lease agreements, floating rate debt obligations and interest rate derivatives.
+Added: Our primary interest rate exposures relate to our floating rate debt obligations.
Rent payments under our aircraft lease agreements typically do not vary during the term of the lease according to changes in interest rates.
1 unchanged sentence
Therefore, to the extent our borrowing costs are not fixed, increases in interest rates may reduce our net income by increasing the cost of our debt without any corresponding increase in rents or cash flow from our securities.
−Removed: Changes in interest rates may also impact our net book value as our interest rate derivatives are periodically marked-to-market through shareholders’ equity.
−Removed: Generally, we are exposed to loss on our fixed pay interest rate derivatives to the extent interest rates decrease below their contractual fixed rate.
−Removed: The relationship between spreads on derivative instruments may vary from time to time, resulting in a net aggregate book value increase or decrease.
−Removed: Changes in the general level of interest rates can also affect our ability to acquire new investments and our ability to realize gains from the settlement of such assets.
+Added: If LIBOR is no longer available or in certain other circumstances as described in the borrowing agreements, the applicable borrowing agreements provide a mechanism for determining an alternative rate of interest.
+Added: There is no assurance that any such alternative, successor or replacement reference rate will be similar to, or produce the same value or economic equivalence of, LIBOR.
Sensitivity Analysis
4 unchanged sentences
It also does not include a variety of other potential factors that could affect our business as a result of changes in interest rates.
−Removed: A hypothetical 100-basis point increase/decrease in our variable interest rates would increase/decrease the minimum contracted rentals on our portfolio as of February 28, 2021 by $1.4 million and $0.3 million, respectively, over the next twelve months.
As of February 28, 2022, a hypothetical 100-basis point increase/decrease in our variable interest rate on our borrowings would result in an interest expense increase/decrease of $3.3 million and $0.7 million, respectively, net of amounts received from our interest rate derivatives, over the next twelve months.
−Removed: We have an interest rate cap to hedge a portion of our floating rate interest exposure which is set at 2% and has a current notional balance of $225.0 million and reduces over time to $215.0 million.
−Removed: The cap matures in September 2021.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
2 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.