Airport Car-Rental Bonds Crash

Moody’s Investors Service downgraded $80 million of Alaska Industrial Development and Export Authority rental car facility revenue bonds to Baa1 from A3 with a negative outlook, amid falling rentals at Ted Stevens Anchorage International Airport.

Moody’s cut the rating on the bonds used to due partly to a steep fall in airport rentals last year.

“A sharp -23.3% decrease in car rental transactions in 2009 significantly changed the financial position of these bonds,” Moody’s said in a report Tuesday.

The rapid slide in rentals has prompted an increase in charges to renters that is among the highest in the nation, Moody’s said.

The rating agency added that the authority’s debt-service reserve fund is supported by a very weak surety policy.

In recent years, analysts said fluctuating rental levels and a challenging economy have reduced debt service coverage and will limit growth for the near to medium term.

However, Moody’s said the airport facility supports a strong rental car market with no significant competition from local mass transit.

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