CHICAGO - In Chicago's second dose of good airport credit news, Standard & Poor's on Tuesday raised O'Hare International Airport's ratings by one level as the city heads into the market next week with $2 billion of mostly refunding debt.
The rating agency lifted O'Hare's general airport revenue bonds and stand-alone passenger facility charge bonds to A from A-minus. The upgrades stem from the airport's strengths and headway made on its $8 billion long term plan to reconfigure and expand runways. The outlook on both is stable.
The upgrade comes as the city is prepping five series of senior lien GARBs to refund $1.7 billion of debt for savings and raise another $300 million for capital projects and retire short-term commercial paper notes. JPMorgan and Loop Capital Markets LLC are joint bookrunning senior managers.
"The upgrade reflects our view of ORD's large origin-destination base, high traffic levels, and importance to the global aviation system as a major connecting hub," said Standard & Poor's analyst Joseph Pezzimenti. It further stems from substantive completion of its runway reconfiguration program for which the remaining portions that analysts consider manageable.
"We believe these factors will allow the airport to continue to maintain steady financial results," Pezzimenti said.
The rating agency attributed the PFC upgrade to expectations that good pro forma maximum annual debt service coverage will continue as long as passenger levels remain relatively stable. The credit also benefits from a front-loaded debt service schedule, allowing capacity for additional stand-alone PFC bonds, if the city chooses, to fund the airport's capital needs.
Analysts will be keeping an eye on how the city tackles remaining projects which require airline approval and the outcome of lease negotiations as the current one expires in 2018. "How well ORD [O'Hare] manages higher debt levels and a higher airline cost structure will also be an important factor," Standard & Poor's added.
Fitch Ratings last week elevated its outlook on O'Hare's A rating on its general credit to positive.
The airport has $6.4 billion of senior lien general airport revenue bonds and $637 million of PFCs.
