Fitch Ratings last week downgraded $103 million of Massachusetts Port Authority special facilities revenue bonds to BBB from A-minus. The outlook is stable.
The action affects Series 2007 bonds backed by rent payments from airlines that are members of the BosFuel project at Boston Logan International Airport. BosFuel offers fuel storage and distribution at Logan for all airlines, with member airlines paying a lower rate.
The downgrade is due to the lack of a highly rated reserve surety policy or liquid cash reserves within the project’s debt-service reserve fund, Fitch said. Financial Guaranty Insurance Co., which is unrated, supplied the original reserve surety policy on the BosFuel project.
“Fitch believes a fully funded debt-service reserve fund is essential to the rating level of the airport fuel facilities revenue bonds, given the narrow revenue stream securing the bondholders, the availability of only sum-sufficient coverage with no additional dedicated bond reserves, and the potential risk for cash-flow disruptions caused by delinquencies or bankruptcy from either BosFuel or member carriers,” the report said.
More than 20 airlines are members of BosFuel. American Airlines is the largest user of the facility, with 21.5% of total gallons pumped in 2009.