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U.S. Airport Ratings Placed On CreditWatch Negative On Severe Passenger Declines And Weakening Credit Metrics

(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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