"S&P Rates Port Auth Of NY & NJ's $500 Mln Bonds AA-"

Tuesday, June 17, 2003
 
S&P Rates Port Auth Of NY & NJ's $500 Mln Bonds AA-
DOW JONES NEWS


NEW YORK (Standard & Poor's) - Standard & Poor's Ratings Services today
assigned its 'AA-' rating to the Port Authority of New York and New Jersey's
$500 million 131st series consolidated bonds, while affirming all
outstanding consolidated notes and bonds issued by the Port Authority of New
York and New Jersey. The rating reflects Standard & Poor's continuing view
that the Port Authority of New York and New Jersey's financial profile has
remained strong enough to support the existing rating due to its diversity
of operations, very strong liquidity, and critical position in the region,
along with anticipated continued solid debt service coverage for the current
fiscal year.  

"The negative outlook is based on the slow recovery in air traffic demand at
the Port Authority's airports, which could prolong the financial recovery of
the Port Authority since 55% of its revenues is derived from its aviation
group," said Standard & Poor's credit analyst Laura Macdonald. "Although
traffic levels at the three major airports appear to be rebounding, Standard
& Poor's still considers the recovery at the three major airports a slow and
gradual one, which will ultimately cause reduced revenue flexibility. Should
the demand profile for these airports not recover over the intermediate
term, producing notable erosion in financial performance, or if the Port
Authority's capital needs significantly increase, a downgrade could occur in
the next 18 months," continued Ms. Macdonald.

Weaknesses include depressed passenger activity levels at the Port
Authority's three major airports - LaGuardia Airport (LGA), John F. Kennedy
International Airport (JFK), and Newark Liberty International Airport (EWR).
Passenger activity at all three airports declined 11% in 2001 and an
additional 3% in 2002. The passenger traffic levels in 2002 were comparable
to those experienced in 1996. Air traffic at the three airports are expected
to continue to be negatively affected over the intermediate to longer term
as a result of weaker air traffic levels and general instability and
financial stress of the air carriers. This has resulted in the air carriers
having reduced financial margins and liquidity as well as higher costs and
debt levels than previously expected. Standard & Poor's is also concerned
with the Port Authority's large ongoing capital program. The current
five-year capital program (2003-2007) is approximately $8.7 billion. The
total cost to complete the projects in the five-year capital plan is
estimated to be $14 billion. In addition to accessing the capital markets to
fund approximately 30% of the capital program, the Port Authority expects
that the remaining funding for the capital program will come from direct
investment of PANYNJ reserve funds, insurance proceeds, FEMA funding, and
other available federal funding.

The Port Authority's revenues are generated from the three major airports in
the New York metropolitan area (57% of revenues), along with six interstate
bridges and tunnels; lease and rental payments derived from the World Trade
Center; marine terminals; and various economic development projects. These
properties include: LGA, JFK, EWR; the Lincoln and Holland tunnels; and the
Outerbridge, Goethals, Bayonne and George Washington bridges, the Port
Authority Bus Terminal, as well as the PATH interurban rapid transit system
between New York and New Jersey. Historically, three operating divisions
(interstate transportation network, aviation, and the WTC) have provided
revenues sufficient to cover all operating costs, including marginal
operating results at the marine terminals and economic development projects
as well as sizable operating deficits at PATH and the bus terminal.


 Do you have an opinion about this story?
Share it with other readers in our CAA Discussion Forums

http://www.californiaaviation.org/dc/dcboard.php

*****************************************