Des Moines Airport Revs Raised to A by S&P

Standard & Poor's Ratings Services said it has raised its rating on Des Moines Airport Authority, Iowa's revenue bonds outstanding, issued on behalf of Des Moines International Airport, to A from A-minus.

The outlook is stable.

"The upgrade reflects our assessment of a small-hub airport with strong debt service coverage and a stable air trade service area," said Standard & Poor's credit analyst Georgina Rovirosa.

More specifically, the rating reflects the following credit strengths: the origination and destination nature of airport enplanements, combined with a good air trade service area economy; historically strong high debt service coverage, at no lower than 2x in the past five years; a relatively low debt burden; and no additional debt needs.

Offsetting credit concerns include: moderate competition from two surrounding airports with low-cost carrier service; and a moderately high cost per enplanement compared with that of small-hub airports, at $8.90 in 2012.

Des Moines (population: 203,433) is Iowa's capital and largest city. The metropolitan area serves as a major center for the insurance industry. Classified as an O&D airport with annual enplanements of slightly more than 1 million, DSM is a small-hub airport.

The stable outlook reflects the expectation that, over the next two years, the airport's enplanement demand levels will continue to demonstrate positive growth and that liquidity and debt service coverage levels will remain strong. To the extent that DSM significantly dilutes its liquidity position or if enplanements decline materially, the agency could lower the rating. It does not expect to raise the rating during the two-year outlook period.

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