WASHINGTON — The Metropolitan Washington Airports Authority’s outlook was revised to negative by Moody’s Investors Service on Wednesday, ahead of a $350 million revenue bond transaction it has scheduled for later this month.
The outlook was revised to negative from stable based on the expectation of “significantly higher” costs per enplaned passenger and lower debt-service coverage, Moody’s analysts said in a report. Moody’s affirmed its Aa3 rating on the authority’s outstanding airport bonds.
The rating applies to the authority’s airport bonds and does not affect bonds issued for the project to extend the Metrorail system to the Washington Dulles International Airport, MWAA officials said.
The agency projects that its cost per enplaned passenger will rise to more than $21 beginning in fiscal 2011 from $13.47 in fiscal 2009. Its debt-service coverage ratio is forecast to decline below 1.35 beginning in fiscal 2010, down from 1.49 in fiscal 2009, Moody’s said.
The authority operates the Ronald Reagan Washington National Airport and the Dulles airport, which were the 24th and 27th largest U.S. airports by enplanement, respectively, through March, according to data from the Department of Transportation.
MWAA plans to issue its next airport bonds on July 19 and 20. It will use most of the proceeds to refund all but $38.5 million of outstanding commercial paper notes and all or a portion of Series 1998B and 1999A bonds.
The authority is in the midst of a capital construction program that is expected to last until 2016. During this time, its debt-service coverage is expected to be in the mid-1.30s range, said Andrew Rountree, chief financial officer and acting vice president for finance.
The construction program is now “at its most mature” and about $200 million of debt needs to be issued after this next bond sale to complete the program, he said.
“We are at the point in time where our debt [load] is the heaviest,” Rountree said.
Standard & Poor’s has reaffirmed the authority’s airport bond rating at AA-minus with a stable outlook, Rountree said. He said the negative outlook from Moody’s is not expected to add to debt-service costs because the rating was affirmed.
Between 2010 and 2016, MWAA’s projected enplanements for both airports are expected to grow 1.5% per year on average. The authority uses traffic estimates from Jacobs Consultancy Aviation Practice.
“There is a steady and growing demand for service at the airports,” Rountree said.
The authority ranked 17th among issuers by par amount in the Northeast last year and issued $342.6 million of debt through the first half of 2010, according to Thomson Reuters.
