On November 7, 2013, it was widely reported that the FBI has begun an investigation into the Grand Junction Regional Airport Authority, Colo., (Baa2/stable) for financial fraud.

The authority has not been informed of the exact nature of the investigation, which makes any credit impact unclear at this time.

Moody's does note that the involvement of the FBI is rare, as most allegations of airport non-compliance with Federal statutes are investigated by the FAA. The airport is currently operating at near normal conditions.

A finding of financial fraud would not impact the airport's ability to collect landing fees and terminal rents, which serve as the source of security for the currently outstanding bonds. However, a review of the boilerplate FAA Airport Improvement Program (AIP) grant agreements indicates that any recipient must make all efforts to recover any Federal funds which have been fraudulently spent.

If the recipient were to fail to do so, the grant agreement can be terminated for cause. Moody's notes that the authority's public 10-year capital plan requires about $77 million of discretionary grants as part of the $180 million plan. If AIP eligibility were imperiled, the airport would likely need to issue more debt than originally planned or modify the capital program, raising leverage and costs to airlines, or delay construction. Either course would negatively pressure the rating.

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