"S&P-US airports face financial pressure, rating cuts"

Friday, April 6, 2012

S&P-US airports face financial pressure, rating cuts
Reuters


America's airports may not get all the federal funding promised in a new
capital improvements program and some airports will face financial pressures
that could yield credit-ratings cuts, Standard & Poor's said on Thursday.

President Obama in February signed a Federal Aviation Administration bill
okaying $3.35 billion in annual airport improvements funds for the fiscal
years through 2015.

But that was $165 million a year less than a previous program and the bill
did not authorize increases in airport passenger fees that airport operators
had sought, according to S&P.

"And with Washington seeking to cut the national debt, trim the federal
budget, and reduce appropriations, the actual funding levels may be even
lower than those authorized currently," S&P said in the new report.

Airports need to build and improve facilities to meet rising demand and may
have to turn to the U.S. municipal bond market or other lenders to make up
for any shortfalls in federal funds.

"The obvious choices to fund urgent capital projects are to approach the
debt markets or draw on available liquidity," the report said. "Either
option could become a rating factor, especially if new debt or reduced
liquidity results in a financial risk profile that is no longer consistent
with the existing credit rating."

The credit-ratings group said the airport issuers it tracks are all
investment grade and are deeply affected by the overall performance of the
U.S. economy. Any ratings reductions would likely be one notch, S&P said.

>From 2009 to 2011, S&P lowered ratings on 17 general airport revenue bonds
and raised ratings on nine. In 2006 through 2008, before the Great
Recession, S&P raised ratings on 27 airport revenue bond issues and cut its
rating on just one.

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