Moody's Investors Service has downgraded to A1 from Aa3 the Metropolitan Washington Airports Authority's $5 billion of airport revenue bonds.

The downgrade stems from unimpressive aircraft passenger traffic in recent months, likely driven at least partially by federal sequestration cuts, Moody's said. MWAA operates both Ronald Reagan Washington National Airport and Dulles International Airport in Northern Virginia. Enplanement, passengers boarding aircraft, was light in fiscal year 2012 and up only 1.3% in 2013.

"Growth has not been strong enough to return financial metrics to Aa3 levels," Moody's said. "Further, we expect airline industry contraction and changes in federal spending levels, which have only begun to take effect, will continue to limit growth as debt service requirements increase.

The outlook is stable, reflecting MWAA's conservative management and strong demand for air travel in the region. The rating could be revised back upward if enplanement surpasses expectations, but could go down if financial metrics narrow further or if MWAA is unable to negotiate a new lease with the airlines that provides equal credit protection to the current one.

MWAA also has billions of bonds outstanding that are backed by revenue from the controversial Dulles Toll Road, but those securities are not at issue here. The authority was wracked by scandal throughout 2012 when a federal investigation revealed wasteful internal spending and nepotism in the authority's board of directors, but reforms pushed by the Department of Transportation as well as state and local leaders have assuaged some concerns.

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