Lambert-St. Louis International Airport received a triple dose of good credit news last week when Moody's Investors Service followed Fitch Ratings in upgrading the airport's credit and Standard & Poor's revised its outlook to stable from negative.
The actions - in recognition of the airport's proactive steps to improve the credit and stabilizing passenger levels -- impact $803 million of debt. They come ahead of the city's $37 million refunding of airport debt for savings planned for next month.
Moody's raised the rating to A3 from Baa1 and assigned a stable outlook while Standard & Poor's revised its outlook to stable from negative and affirmed the airport's A-minus rating. Fitch previously had raised the rating one notch to BBB-plus from BBB and assigned a stable outlook.
"Bond rating upgrades like these are critical to accessing the capital markets at the lowest possible interest rates to reduce debt service costs," St. Louis Comptroller Darlene Green said in a statement.
Moody's attributed the upgrade to the airport's "improved financial metrics through proactive management actions to reinforce the airports credit strength."
The actions include improving debt service coverage through the addition of a debt service stabilization fund and an improved cash position through the reclassification of funds that provide additional bondholder protections.
The upgrade also recognizes the stabilization of enplanement levels after several years of significant declines, Moody's said. The credit benefits from the airport's dominant market share in the St. Louis region and cash balances that provide financial liquidity.
The credit is challenged by the impact of costs associated with the financing of new runway and capital projects will continue to keep debt service coverage margins thin; a high dependence on airline revenues at more than 60%; and limited growth prospects due to slow growth in the St. Louis region.
