Press Release|Public Finance

KBRA Upgrades Lee County, Florida (Southwest Florida International Airport) to AA- from A+; Outlook is Stable

8 Sep 2023   |   New York


KBRA upgrades the long-term rating to AA-, from A+, for Airport Revenue Bonds issued by Lee County, Florida (the County). The Outlook is Stable.

The rating upgrade recognizes the strong recovery in enplanement levels realized at Southwest Florida International Airport (“SWIFIA” or “the Airport”) through July 2023, despite some month-to-month volatility management attributes to a post-pandemic normalization of air travel, as well as the continued generation of ample debt service coverage commensurate with the elevated rating.

The long-term rating reflects SWFIA’s recreation-based service area, which has fueled the aforementioned enplanement recovery; healthy operating performance and debt service coverage; and strong liquidity. Counterbalancing the aforementioned strengths is a significant, though well managed, demand-driven capital improvement program (“CIP”), which will result in ascending debt service and operating costs; and an air trade area which remains somewhat vulnerable to economic cyclicality.

Key Credit Considerations

The rating was upgraded because of the following key credit considerations:

Credit Positives

  • Established leisure market, which drives enplanement growth; the traffic recovery post pandemic exceeds the U.S. average.
  • Operational stability provided by significant origin and destination traffic and limited airline concentration.
  • Favorable operating performance and debt service coverage, coupled with strong balance sheet liquidity.

Credit Challenges

  • Some vulnerability of the Airport’s tourism driven passenger base to economic cyclicality.
  • On-going implementation of a large, multi-phase CIP which will increase debt service and operational costs.

Rating Sensitivities

For Upgrade

  • Additional and sustained rebound in non-airline revenues, resulting in material strengthening of leverage and liquidity metrics.
  • Implementation of the CIP on-time and on-budget.

For Downgrade

  • Significant increase in debt without a commensurate growth in resources available for repayment.
  • While not expected, a structural change in air travel demand at the Airport, potentially leading to sustained weakening in operating margin and debt service coverage.

To access rating and relevant documents, click here.


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