(Editor's Note: A previous version of this report included in Table 1 Nashville International Airport's 1st Lien CFC bonds, which were no longer outstanding at the time of publication. A corrected version follows.)
BOSTON (S&P Global Ratings) Aug. 7, 2020--S&P Global Ratings placed 98 ratings on most U.S. airports and airport-related obligations on CreditWatch with negative implications, affecting 63 different obligors. (See table 1.) The CreditWatch placements are based on our view that a material change in the performance of airports and related issuers has occurred and the magnitude of the rating impact has not been fully determined. We believe the ongoing COVID-19 pandemic will result in materially depressed, unpredictable, or anemic passenger activity levels for an extended period, which is increasingly weakening the overall credit quality of U.S. airports and airport-related issuers.
Given the highly uncertain industry conditions and challenges ahead, we see rating downgrades of one or more notches as likely. In our view, the airport sector is venturing into uncharted territory with likely slow systemwide passenger traffic growth; a smaller and weakened airline industry; and airport operators exposed to credit risk from a business model untested in the current, severely stressed operating environment. Time horizons, predictions regarding the evolution of the coronavirus pandemic, and related impacts remain highly ambiguous and we believe current airport financial forecasts based on estimates of passenger recovery scenarios are subject to considerable uncertainty. We view this precipitous decline not as a temporary disruption with a relative rapid recovery, but rather as a backdrop for what we believe will be sluggish air travel for a prolonged period.
For these reasons, we previously lowered 17 ratings on 10 not-for-profit airport infrastructure issuers (see table 2), and expect to complete our comprehensive sector review within the next 90 days. We based our rating actions on our opinion that market positions have weakened, eroding overall credit quality. Under our criteria, market position is a primary credit factor that incorporates activity-level trends; passenger volatility; rate-setting flexibility; and additional considerations outside of the operator's control, including health scares.
For those ratings placed on CreditWatch today we will likely follow a similar analytical approach by reviewing our market position assessment and other considerations. All U.S. airport and related ratings will be analyzed with respect to their ability to mitigate the financial pressures of lower traffic volumes and navigate an evolving landscape. This will inform our prospective view to determine if financial metrics are achievable, sustainable, and align with current rating levels. (See "This Time Is Different: An Anemic And Uncertain Passenger Recovery Will Challenge Airports' Credit Quality," published Aug. 7, 2020, on RatingsDirect.)
We believe defaults are not imminent and the sector as a whole benefits from several factors that have historically supported positive credit trends, including recovery from economic cycles and disruptions (see "When The Cycle Turns: U.S. Airport Balance Sheets--And Exposures--Increase With Traffic," published July 9, 2019). Given the generally strong financial flexibility across the airport sector pre-COVID-19, liquidity--including federal aid along with debt restructurings to improve cash flow debt service coverage--can provide interim credit support at the investment-grade level. However, we believe this is not a substitute for sustainable, self-supporting financial operations commensurate with higher ratings. Although airport operators have resources to ensure timely payment of debt service, our criteria give weight to sustainable financial operations from recurring revenue sources.
Our rating actions incorporate our opinion regarding the health and safety risks posed by the COVID-19 pandemic, which we view as a social factor in our environmental, social, and governance framework and is resulting in significant operating and financial pressures for the sector. We will continue to evaluate these risks as the situation evolves and update the market periodically as events warrant.
Table 1
Airport-Related Ratings Placed On CreditWatch With Negative Implications | ||||||
---|---|---|---|---|---|---|
Issuer | State | Current rating | ||||
Albany International Airport - 1st Lien GARB | NY | A | ||||
Augusta Regional Airport - 1st Lien GARB | GA | BBB | ||||
Austin Bergstrom International Airport - 1st Lien GARB | TX | A | ||||
Austin Bergstrom International Airport - 2nd Lien GARB | TX | A- | ||||
Austin-Bergstrom International Airport Rental Car Special Facility - 1st Lien CFC | TX | A | ||||
Baltimore/Washington International Airport - 1st Lien (parking facilities) | MD | A | ||||
Baltimore/Washington International Airport - 1st Lien stand-alone PFC | MD | A+ | ||||
Bradley International Airport Parking - 1st Lien GARB | CT | A+ | ||||
Bradley International Airport Rental Car Facility - 1st Lien CFC | CT | A- | ||||
Burbank-Glendale-Pasadena Airport Authority - 1st Lien GARB | CA | A+ | ||||
Bush Intercontinental Airport and Hobby Airport - 2nd Lien GARB | TX | A+ | ||||
Bush Intercontinental Airport Rental Car Facility - 1st Lien CFC | TX | A | ||||
Charleston County Airport - 1st Lien GARB | SC | A+ | ||||
Charlotte/Douglas International Airport - 1st Lien GARB | NC | AA- | ||||
Charlotte/Douglas International Airport Rental Car Facility - 1st Lien CFC | NC | A | ||||
Chicago Midway International Airport - 1st Lien GARB | IL | A | ||||
Chicago Midway International Airport - 2nd Lien GARB | IL | A | ||||
Chicago O'Hare International Airport - 1st Lien GARB | IL | A | ||||
Chicago O'Hare International Airport - 1st Lien Stand-alone PFC | IL | A | ||||
City of Palm Springs - 1st Lien Stand-alone PFC | CA | A | ||||
Cleveland Hopkins International Airport - 1st Lien GARB | OH | A | ||||
Dayton International Airport - 1st Lien GARB | OH | BBB+ | ||||
Denver International Airport - 1st Lien GARB | CO | A+ | ||||
Denver International Airport - 2nd Lien GARB | CO | A | ||||
Des Moines International Airport - 1st Lien GARB | IA | A+ | ||||
Detroit Metro Wayne County Airport - 1st Lien GARB | MI | A | ||||
Detroit Metro Wayne County Airport - 2nd Lien GARB | MI | A- | ||||
El Paso International Airport - 1st Lien GARB | TX | A+ | ||||
Fort Lauderdale-Hollywood International Airport - 1st Lien GARB | FL | A+ | ||||
Fresno Yosemite International Airport - 1st Lien GARB | CA | A | ||||
Guam International Airport - 1st Lien GARB | GU | BBB+ | ||||
Hartsfield Jackson Atlanta International Airport - 1st Lien GARB | GA | AA- | ||||
Hartsfield Jackson Atlanta International Airport - 2nd Lien GARB | GA | AA- | ||||
Hartsfield Jackson Atlanta International Airport Rental Car Facility Project- 1st Lien CFC | GA | A | ||||
Hawaii Airport System - 1st Lien CFC | HI | A+ | ||||
Hawaii Airport System - 1st Lien GARB | HI | AA- | ||||
Hawaii Airport System - 2nd Lien GARB | HI | A+ | ||||
Indianapolis International Airport - 1st Lien GARB | IN | A | ||||
Jackson County Rogue Valley Intl Medford Airport - 1st Lien GARB | OR | A | ||||
John Wayne Airport - 1st Lien GARB | CA | AA- | ||||
Kansas City International Airport - 1st Lien GARB | MO | A | ||||
Lambert-St. Louis International Airport - 1st Lien GARB | MO | A | ||||
Las Vegas-McCarran International Airport - 1st Lien GARB | NV | AA- | ||||
Las Vegas-McCarran International Airport - 2nd Lien GARB | NV | A+ | ||||
Las Vegas-McCarran International Airport - 3rd Lien GARB | NV | A+ | ||||
LAXFUEL Corp. - 1st Lien (fuel facilities) | CA | A | ||||
Louisville International Airport - 1st Lien GARB | KY | A+ | ||||
Love Field Airport Modernization Corp. - 1st Lien GARB | TX | A | ||||
Manchester Airport - 1st Lien GARB | NH | BBB+ | ||||
Massachusetts Port Authority (Boston Logan International Airport) - 1st Lien GARB | MA | AA | ||||
Massachusetts Port Authority Rental Car Facility - 1st Lien CFC | MA | A | ||||
Memphis International Airport - 1st Lien GARB | TN | A | ||||
Miami International Airport - 1st Lien GARB | FL | A | ||||
Minneapolis-St. Paul International Airport - 1st Lien GARB | MN | AA- | ||||
Minneapolis-St. Paul International Airport - 2nd Lien GARB | MN | A+ | ||||
Mobile Airport Authority - 1st Lien GARB | AL | BBB+ | ||||
Myrtle Beach International Airport - 1st Lien GARB | SC | A+ | ||||
Nashville International Airport - 1st Lien GARB | TN | A+ | ||||
New Orleans Aviation Board Rental Car Facility - 1st Lien CFC | LA | A | ||||
New Orleans Aviation Board Parking Facilities Corporation - 1st Lien | LA | BBB+ | ||||
New Orleans International Airport - 1st Lien GARB | LA | A | ||||
Norfolk Airport Authority - 1st Lien GARB | VA | A | ||||
Omaha Eppley Airfield - 1st Lien GARB | NE | AA- | ||||
Ontario International Airport - 1st Lien GARB | CA | A- | ||||
Orlando International Airport - 1st Lien GARB | FL | AA- | ||||
Orlando International Airport - 2nd Lien GARB | FL | A+ | ||||
Palm Beach International Airport - 1st Lien GARB | FL | A+ | ||||
Philadelphia International Airport - 1st Lien GARB | PA | A | ||||
Phoenix Sky Harbor International Airport - 1st Lien GARB | AZ | AA- | ||||
Phoenix Sky Harbor International Airport - 2nd Lien GARB | AZ | A+ | ||||
Phoenix Sky Harbor International Airport Rental Car Facility - 1st Lien CFC | AZ | A | ||||
Port of Oakland (Oakland International Airport) - 1st Lien | CA | A+ | ||||
Port of Oakland (Oakland International Airport) - 3rd Lien | CA | A | ||||
Port of Seattle (Seattle-Tacoma International Airport) - 1st Lien | WA | AA- | ||||
Port of Seattle (Seattle-Tacoma International Airport) - 1st Lien Stand-alone PFC | WA | A+ | ||||
Port of Seattle (Seattle-Tacoma International Airport) - 2nd Lien | WA | A+ | ||||
Port of Seattle (Seattle-Tacoma International Airport) - 3rd Lien | WA | A+ | ||||
Portland International Airport - 1st Lien GARB | OR | AA- | ||||
Portland International Airport - 1st Lien Stand-alone PFC | OR | A+ | ||||
Portland International Airport - CFCs - 1st Lien CFC | OR | A- | ||||
Portland International Jetport - 1st Lien GARB | ME | A- | ||||
Rhode Island Economic Development Corp. Rental Car Special Facility - 1st Lien CFC | RI | A | ||||
Rhode Island T. F. Green International Airport - 1st Lien GARB | RI | A | ||||
Salt Lake City International Airport - 1st Lien GARB | UT | A+ | ||||
San Antonio International Airport - 1st Lien CFC | TX | A | ||||
San Antonio International Airport - 1st Lien GARB | TX | A+ | ||||
San Antonio International Airport - 2nd Lien GARB | TX | A | ||||
San Jose International Airport - 1st Lien GARB | CA | A | ||||
SEATAC Fuel Facilities, LLC - 1st Lien (Fuel facilities) | WA | A | ||||
SFO Fuel Co LLC - 1st Lien (fuel facilities) | CA | A | ||||
Southwest Florida International Airport - 1st Lien GARB | FL | A | ||||
Tampa International Airport - 1st Lien GARB | FL | AA- | ||||
Tampa International Airport - 2nd Lien GARB | FL | A+ | ||||
Tampa International Airport CONRAC - 1st Lien CFC | FL | A | ||||
Tri-Cities Airport - 1st Lien GARB | WA | A- | ||||
Tulsa International Airport - 1st Lien GARB | OK | A | ||||
Will Rogers World Airport - 2nd Lien GARB | OK | A+ | ||||
GARB--General airport revenue bonds. CFC--Customer facility charge. PFC--Passenger facility charge. |
Table 2
Airport-Related Rating Actions Taken Since March 26, 2020 | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Issuer | State | Current rating/outlook | Previous rating/outlook | Rating action | Rating action date | |||||||
Chicago O'Hare International Airport Rental Car Facility - 1st Lien CFC | IL | BBB/Negative | BBB/Negative | Affirmation | July 2, 2020 | |||||||
Chicago O'Hare International Airport Rental Car Facility - 2nd Lien CFC (TIFIA Loan) | IL | BBB/Negative | BBB/Negative | Affirmation | July 2, 2020 | |||||||
Dallas-Fort Worth International Airport - 1st Lien GARB | TX | A/Negative | A+/Negative | Downgrade | June 26, 2020 | |||||||
Los Angeles International Airport - 1st Lien GARB | CA | AA-/Negative | AA/Negative | Downgrade | August 4, 2020 | |||||||
Los Angeles International Airport - 2nd Lien GARB | CA | A+/Negative | AA-/Negative | Downgrade | August 4, 2020 | |||||||
Metropolitan Washington Airports Authority - 1st Lien GARB | DC | A+/Negative | AA-/Negative | Downgrade | July 31, 2020 | |||||||
New York Liberty Development Corp. (4 World Trade Center) - Based on Port Authority of New York & New Jersey rating | NY | A/Negative | A+/Negative | Downgrade | June 26, 2020 | |||||||
Newark Housing Authority (Port Authority of New York & New Jersey) | NY | A+/Negative | AA-/Negative | Downgrade | June 26, 2020 | |||||||
Philadelphia Parking Authority - 1st Lien (Philadelphia International Airport) | PA | A-/Negative | A/Negative | Downgrade | August 5, 2020 | |||||||
Port Authority of New York & New Jersey - 1st Lien | NY | A+/Negative | AA-/Negative | Downgrade | June 26, 2020 | |||||||
Sacramento International Airport - 1st Lien GARB | CA | A/Negative | A+/Negative | Downgrade | July 30, 2020 | |||||||
Sacramento International Airport - 2nd Lien GARB | CA | A-/Negative | A/Negative | Downgrade | July 30, 2020 | |||||||
San Diego County Regional Airport Authority Rental Car Facility - 1st Lien CFC | CA | BBB+/Negative | A/Negative | Downgrade | July 30, 2020 | |||||||
San Diego County Regional Airport Authority - 1st Lien GARB | CA | A/Negative | A+/Negative | Downgrade | July 31, 2020 | |||||||
San Diego County Regional Airport Authority - 2nd Lien GARB | CA | A-/Negative | A/Negative | Downgrade | July 31, 2020 | |||||||
San Francisco International Airport - 1st Lien GARB | CA | A/Negative | A+/Negative | Downgrade | July 24, 2020 | |||||||
Tulsa International Airport - 1st Lien GARB | OK | A/Negative | A/Negative | Affirmation | April 2, 2020 | |||||||
GARB--General airport revenue bonds. CFC--Customer facility charge. |
Certain terms used in this report, particularly certain adjectives used to express our view on rating relevant factors, have specific meanings ascribed to them in our criteria, and should therefore be read in conjunction with such criteria. Please see Ratings Criteria at www.standardandpoors.com for further information. Complete ratings information is available to subscribers of RatingsDirect at www.capitaliq.com. All ratings affected by this rating action can be found on S&P Global Ratings' public website at www.standardandpoors.com. Use the Ratings search box located in the left column.
Primary Credit Analysts: | Kurt E Forsgren, Boston (1) 617-530-8308; kurt.forsgren@spglobal.com |
Joseph J Pezzimenti, New York (1) 212-438-2038; joseph.pezzimenti@spglobal.com | |
Todd R Spence, Farmers Branch (1) 214-871-1424; todd.spence@spglobal.com | |
Secondary Contacts: | Paul J Dyson, San Francisco (1) 415-371-5079; paul.dyson@spglobal.com |
Kevin R Archer, San Francisco + 1 (415) 371 5031; Kevin.Archer@spglobal.com | |
Scott Shad, Centennial (1) 303-721-4941; scott.shad@spglobal.com | |
Kenneth P Biddison, Centennial + 1 (303) 721 4321; kenneth.biddison@spglobal.com | |
Kayla Smith, Centennial + 1 (303) 721 4450; kayla.smith@spglobal.com | |
Sussan S Corson, New York (1) 212-438-2014; sussan.corson@spglobal.com |
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