Moody's Ratings revised the outlook to negative from stable on revenue bonds issued for Guam's commercial airport and affirmed the Baa2 rating, citing weaker-than-expected enplanement levels.
The action affects $190 million in debt from the A.B. Won Pat International Airport Authority.
The negative outlook "reflects our expectation that enplanement levels will continue to trend well below even the low end of our expected projections, which demonstrates a weaker position and will challenge the ability for the airport to generate sufficient revenue to maintain satisfactory financial metrics for the current rating level," Moody's said. "This includes liquidity, which has markedly declined in recent years."
Moody's noted the airport's strong position as the sole commercial airport serving the Pacific island territory, the benefits of its hybrid residual airline lease and operating agreements and the support of
The airport authority's debt rating is constrained by the service territory's size and enplanement levels as well as dependence on tourism from South Korea and Japan, Moody's said. Guam in recent years, "lost some of its appeal to Japanese and South Korean visitors." The airport's exposure to environmental risks like typhoons is also a credit negative.
John Quinata, executive manager of the Guam International Airport Authority, told The Bond Buyer, "The revision of the outlook from stable to negative reflects short-term external recovery challenges that are expected to improve gradually."
But despite these issues, the authority "remains firmly committed to meeting its debt obligations, sustaining required debt service coverage ratios, enhancing operational efficiencies and maintaining flexibility in its operations," he said.
GIAA has "worked diligently to contain operations and maintenance expenses,
Fitch Ratings raised the outlook on
