KBRA Assigns AA-, Stable Outlook to Lee County, FL Airport Revenue Bonds
6 Sep 2024 | New York
KBRA assigns an AA- rating, with a Stable Outlook to Lee County, FL ("the County") Airport Revenue Bonds, Series 2024 (AMT). Concurrently, KBRA affirms the AA- rating, with a Stable Outlook assigned to Airport Revenue Bonds previously issued by the County .
Airport Revenue Bonds are secured by and payable from a pledge of net revenues generated by the Airport System and certain funds and accounts held under the Bond Resolution. Generally, Passenger Facility Charges (PFCs) are excluded from net revenues unless otherwise pledged in a Series Resolution. The Bonds, along with Airport Bonds issued in FY 2021 (Series 2021A and Series 2021B), include such a pledge.
Southwest Florida International Airport (RSW or "the Airport"), currently the only member of the Airport System, is governed by the County's Board of County Commissioners and operated by the Lee County Port Authority (LCPA or “the Authority”). The Airport’s finances are maintained as an enterprise fund of the County.
Key Credit Considerations
Credit Positives
- Diversifying, leisure oriented service area which generates robust O&D passenger traffic.
- Sound operating performance and DSC, fueled by healthy non-airline revenue generation, and ample liquidity.
Credit Challenges
- Significant, largely debt funded $1.6 billion CIP, which will materially elevate debt service and operating costs.
- A completion delay for phase I of the terminal expansion and associated, potential cost increases.
- On-going vulnerability of the air trade area to cyclicality in the broader economy.
The Stable Outlook reflects KBRA’s expectation that Authority operating performance and liquidity, fueled by healthy enplanement activity, will remain consistent with historical levels, while pro-forma DSC remains comfortably above required minimums. Additionally, the Outlook expects costs associated with restarting phase I of the CIP to remain manageable, with the entire program brought to timely conclusion without further delay.
Rating Sensitivities
For Upgrade
- Continued growth in non-airline revenues resulting in higher than anticipated DSC and liquidity levels.
- Resolution of CIP delay without negative financial consequence and delivery of remaining projects on-time and on-budget.
For Downgrade
- Increase in debt beyond what is currently contemplated without resources sufficient to support repayment.
- While not expected, a structural decline in air travel demand at RSW resulting in weakened flexibility.
To access rating and relevant documents, click here.