FITCH, MOODY’S AND S&P ASSIGN HIGH RATINGS TO UPCOMING ISSUANCE OF $338 MILLION IN LOS ANGELES INTERNATIONAL AIRPORT REVENUE BONDS
Moody’s Upgrades Rating Outlook on LAX Bonds to “Positive”
Los Angeles World Airports (LAWA) announced that the three primary investment ratings services -- Fitch Ratings, Moody’s Investors Service, and Standard & Poor’s Ratings Services (S&P) -- all assigned high marks for LAWA’s upcoming issuance of approximately $338 million in long-term revenue bonds on behalf of Los Angeles International Airport (LAX) to help fund the airport’s on-going capital improvement projects. Moody’s upgraded its rating outlook to “positive,” while Fitch and S&P maintained “stable” outlooks for their ratings. The 30-year bonds are expected to go on sale next week.
Moody’s Investors Service assigned an “Aa3” rating to $285.475 million Series 2015A and $52.325 million Series 2015B senior revenue bonds to help fund capital improvement projects at LAX, and an “A1” rating on $185 million Series 2015C subordinate revenue refunding bonds for advancing refunds on a portion of outstanding subordinate revenue bonds Series 2008C to save on debt service costs. Moody’s also affirmed its “Aa3” rating on $3.05 billion outstanding senior lien debt and its “A1” rating on $822.6 million outstanding subordinate lien debt. Moody’s upgraded its rating outlook to “positive.” Moody’s based its ratings on LAX’s “strong competitive position, manageable expected debt load, and its diverse set of air carriers serving the large and diverse Los Angeles metropolitan area.” Moody’s also reported LAX has the strongest credit profile in its portfolio of 92 rated U.S. airports.
Standard & Poor’s Ratings Services assigned an “AA” rating to $268.955 million Series 2015A and $47.655 million Series 2015B senior-lien general airport revenue bonds and an “AA-“ rating to $183 million Series 2015C subordinate-lien refunding revenue bonds. S&P also affirmed its “AA” rating on outstanding $3.1 billion senior-lien bonds, its “AA-“ rating on $823 million subordinate-lien bonds, and $252 million subordinate-lien commercial paper notes. S&P’s rating outlook is “stable.” S&P based its ratings on “the airport’s very strong competitive business profile and strong historical financial position.” Specifically, S&P’s ratings reflect LAX’s “position as the largest origination and destination (O&D) airport in the U.S. and the dominant airport in a wealthy, large air trade area;” good air carrier diversity, with no airline (including affiliates) representing more than 20 percent of the market share;” “excellent debt service coverage;” and “experienced, effective management team and prudent, conservative financial practices.”
Fitch Ratings assigned an “AA” rating to $338 million senior revenue bonds and an “AA-“ rating to up to $175 million in subordinate revenue bonds. Fitch also affirmed its “AA’ rating on $3.05 billion outstanding senior revenue bonds and its “AA-“ rating on $822.6 million outstanding subordinate revenue bonds, as well as an “AA-“ rating on bank bonds corresponding to $500 million of authorized subordinate revenue commercial paper notes. Fitch’s rating outlook is “stable.” Fitch based its ratings on LAX’s “superior credit characteristics including a strong underlying air trade service area, significant operational activity supported by a diverse mix of domestic and foreign-flag carriers, favorable rate agreements with airlines, and a very strong financial metrics.”
Fitch Ratings, Moody’s Investors Service, and Standard & Poor’s Ratings Services are all global companies that provide independent analyses and credit ratings of financial securities.
About Los Angeles International Airport (LAX)
LAX is the sixth busiest airport in the world and third in the United States, based on 2013 airport rankings, the latest available. LAX served nearly 70.7 million passengers in 2014. LAX offers 692 daily nonstop flights to 85 cities in the U.S. and 928 weekly nonstop flights to 67 cities in 34 countries on 64 commercial air carriers. LAX ranks 14th in the world and fifth in the U.S. in air cargo tonnage processed, with over two million tons of air cargo valued at over $91.6 billion. An economic study in 2011 reported that operations at LAX generated 294,400 jobs in Los Angeles County with labor income of $13.6 billion and economic output of more than $39.7 billion. This activity added $2.5 billion to local and state revenues. LAX is part of a system of three Southern California airports – along with LA/Ontario International and Van Nuys general aviation – that are owned and operated by Los Angeles World Airports, a proprietary department of the City of Los Angeles that receives no funding from the City’s general fund.
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