LOS ANGELES — Moody's Investors Service downgraded $975 million of bonds issued for Las Vegas' McCarran International Airport May 20.

Moody's dropped Clark County Airport Enterprise, Nev. senior lien bonds to Aa3, and also assigned its A2 rating to $118 million in junior subordinate lien revenue notes the airport plans to price June 2.

The senior lien bonds were downgraded a notch to Aa3 from Aa2. The outlook is stable on all liens.

The downgrade reflects Moody's assessment that the senior lien debt is better positioned at Aa3, compared to other highly rated peers.

Moody's said in the report that the senior lien debt service coverage remains well above the median near four times, but the lack of debt service reserve funds on some series weakens the positive impact of the high coverage.

"Additionally, the enterprise as a whole has a complex debt structure with three liens, including VRDOs, BANs and swaps that other similarly rated airports do not have," analysts said. "This complex debt structure, as well as the unique airline use and lease agreement, requires active management, which the airport has displayed both historically and currently."

The A2 rating on the expected note sale reflects the anticipated four to five year tenor, slimmer financial metrics than the senior or subordinate lien and market access risk, Moody's analysts said.

The stable outlook is based on Moody's projection for modest economic growth in the United States. That growth should support stable demand for discretionary travel to Las Vegas and the airport's projections for stable airline costs and other financial metrics, according to the report.

A slowing of the accumulation of unrestricted liquidity through gambling revenue that serves to offset the lack of full debt service reserve funding would negatively pressure the rating, according to the report.

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