BRADENTON, Fla. - Hartsfield-Jackson Atlanta International Airport's revenue bonds received a one-notch upgrade by Fitch Ratings, which cited a new lease agreement with Delta Air Lines as a major factor for its action.
Fitch raised its rating to AA-minus from A-plus on $1.7 billion of senior-lien general airport revenue bonds issued for the world's busiest airport by the city of Atlanta.
Fitch also affirmed its A-plus ratings on $828 million of outstanding passenger facility charge-backed subordinate-lien revenue bonds.
The rating outlook is stable.
"The upgrade of the senior GARBs reflects Fitch's view that the new airline use and lease agreement will maintain the airport's strong cash-flow generation and low leverage, even when taking into account Atlanta's new $6 billion capital program," analyst Jeffrey Lack wrote Thursday.
In April, Atlanta inked a 20-year lease with Delta Air Lines to keep the carrier based at the airport for the next two decades. The deal also requires Delta to keep its corporate headquarters in Atlanta through 2036.
The one-notch upgrade by Fitch to AA-minus unifies the airport's ratings in the double-A category, said Atlanta's Chief Financial Officer Jim Beard.
The senior bonds are rated Aa3 by Moody's Investors Service and AA-minus by S&P Global Ratings.
"The lease with Delta "keeps the airport's overall debt coverage ratios high and cash flow strong." Beard said.
"The city is confident that this upgrade will decrease the cost of capital as well as increase the level of interest in any bonds issued as part of our upcoming $6 billion capital program," Beard said. "The projects included in this capital expansion are critical to maintaining Hartsfield-Jackson International Airport's position as the world's busiest airport."
In August 2015, Atlanta issued $450 million of commercial paper notes to provide interim financing for planning, engineering, design, acquisition and construction of certain improvements, including projects related to the capital improvement plan.
The city expects to issue airport-related bonds in 2017 to term out a portion of the CP program, according to Beard.
The $6 billion CIP will be funded over the next 20 years, and is designed to keep pace with rising passenger and aircraft demands.
The plan includes building two new domestic parking decks, adding five gates to the domestic concourse, building a sixth runway, and investing more than $900 million in a new international concourse.
A $500 million hotel and mixed-use commercial complex as well as new cargo and firefighting facilities are also planned.
Hartsfield-Jackson saw a record 101 million passengers last year, a 5.52% increase over 2014.