Fitch Ratings said it has downgraded approximately $4.7 billion in outstanding Dallas-Fort Worth International Airport joint revenue improvement bonds to A from A-plus and assigned an A rating to the $369.4 million series 2013A and $366.5 million, series 2013B joint revenue improvement bonds issued by the cities of Dallas and Fort Worth, Texas, on behalf of Dallas-Fort Worth International Airport.
Fitch has also revised the rating outlook for all bonds to stable from negative.
The rating downgrade reflects the sizable increase in airport borrowings to fund DFW's terminal renewal and improvement (TRIP) and ongoing capital programs. The combined cost of the two capital programs is in excess of $4 billion and will raise total debt in excess of $6.5 billion.
In Fitch's view, the rising debt burden over the next 12-24 months will result in high leverage, estimated at 13 times (x)-15x net debt to cash flow.
The mounting debt presents a higher degree of risk with regard to financial flexibility and cost competitiveness. Leverage of this level is not consistent with the debt burden of other A-plus rated large-hub U.S. airports.
Mitigants to the debt ratio include the strong local market, the strategic location of Dallas-Fort Worth to serve as a hub, the likely favorable resolution of the American Airlines bankruptcy and DFW's recent positive operational and traffic performance.