Standard & Poor's Ratings Services said it lowered its rating on the St. Louis Regional Airport Authority, Ill.'s series 2009 general obligation bonds to A from A-plus.
At the same time, Standard & Poor's lowered its long-term rating on the Authority's series 2010 GO limited-tax debt certificates to A-minus from A, and assigned its A-minus long-term rating to the Authority's series 2014 GO limited-tax debt certificates. The outlook on all the ratings is stable.
Securing the series 2009 GO bonds is an unlimited ad valorem property tax. Standard & Poor's rates the series 2010 and series 2014 debt certificates one notch below the A GO rating given the limited nature of the security. The Authority has pledged all legally available revenues to the debt certificates, but there is no statutory authority to levy a separate ad valorem tax for debt service.
"The downgrade is based on a substantially lower available cash position compared to prior years," said Standard & Poor's credit analyst John Sauter, "though much of the decline is due to capital spending." It also reflects increased operational pressures that may result from the issuance of the series 2014 debt certificates and associated increased debt service costs, given there is no tax backing and revenues are concentrated.
"The A GO rating also reflects the district's large tax base, strong reserve position, and moderate debt burden," added Sauter.
Other limiting credit factors include high debt service carrying charges and revenue concentration, the latter both in terms of revenue type and individual revenue generators.
St. Louis Regional Airport Authority operates the St. Louis Regional Airport, a general aviation airport that serves as a reliever for Lambert-St. Louis International Airport.
The stable outlook reflects the expectation that the authority will continue to generate sufficient revenues from its property taxes to service debt and from its lease rentals to support operating costs.
"In our opinion, the issuance of the certificates could present budget pressures if the expected revenue source does not materialize or falls short," said Sauter, "yet the presence of the operating levy flexibility mitigates this risk, to an extent."
Exhausting this unused levy capacity would also reduce revenue flexibility, but we still expect that management will operate with at least good cash reserves. The loss of significant taxpayers or rental tenants could place downward pressure on the rating. At the same time, should the revenue stream diversify with additional tenants, the rating could improve.
