KBRA Upgrades Ratings for Various Clark County, NV Airport System Revenue Bonds; Outlook is Stable
27 Feb 2025 | New York
KBRA upgrades the long-term ratings, each with a Stable Outlook, on the following Clark County, NV Bonds and Notes:
- Subordinate Lien General Airport Revenue Bonds (GARBs) to AA from AA-
- Passenger Facility Charge (PFC) and Subordinate Lien GARBs to AA from AA-
- Junior Subordinate Lien Revenue Notes and Jet A Bonds to AA- from A+
The Outlook on all liens is Stable.
The upgrades reflect the proven strength and resiliency of air travel market served by Harry Reid International Airport (LAS or the “Airport”), most recently evidenced by the full recovery, and subsequent growth, in enplanements following the Covid-19 pandemic (the “pandemic”). The Clark County Department of Aviation’s (the “Department’s”) material progress in reducing outstanding leverage, and its effective track record of managing risks associated with a more aggressive capital structure that encompasses both variable rate obligations and related hedges, were also considerations. KBRA notes that LAS remains one of only a handful of large hub airports in the U.S. without significant, future capital needs. Through FY 2028, the Department’s five year capital improvement plan (CIP) totals $756.8 million, none of which is expected to be debt financed.
The Stable Outlook reflects KBRA’s expectation that healthy passenger activity will continue to underpin healthy financial performance and ample liquidity, providing the Department with operational and capital support commensurate with the rating level. Further moderation of debt metrics is expected given the absence of borrowing in the CIP.
Key Credit Considerations
Credit Positives
- Large, mainly O&D passenger base with limited competition and a diverse carrier mix.
- Strong liquidity and satisfactory debt service coverage margins, given the residual Use and Lease Agreement.
- Declining annual debt service requirements and an absence of expected borrowing in CIP.
Credit Challenges
- Leisure and hospitality base could be vulnerable in a severe economic downtown and competitive pressures.
- Significant variable rate debt / interest rate swaps require ongoing monitoring and have associated risks.
Rating Sensitivities
For Upgrade
- Significant, additional progress toward a fixed-rate debt structure.
- Materially improved debt metrics.
For Downgrade
- Material reduction in debt service coverage and/or liquidity.
- Sustained enplanement decline due to diminished air trade area relevance.
To access ratings and relevant documents, click here.