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CCAA revenue bonds upgraded to A+ on improved enplanements

CCAA revenue bonds upgraded to A+ on improved enplanements

12/2/2015
 

DALLAS (Standard & Poor's) – Standard & Poor's Ratings Services has raised its rating on the Charleston County Airport District's 2013A and 2013B airport revenue bonds to A+ from A. The outlook is stable.
 
"The upgrade reflects our assessment of a small-hub airport that has demonstrated strong enplanement growth and maintained consistently strong financial metrics, specifically debt service coverage and liquidity," said Standard & Poor's Credit Analyst Anita Pancholy.
 
We consider specific credit strengths to include:
  • Strong historical enplanement trends that are expected to remain at least stable
  • Debt service coverage levels that will be lower but at levels considered at least good on a pro forma basis
  • A historically strong liquidity position, at no less than 508 days' cash on hand since 2010, levels expected to continue
  • No additional debt plans
In Standard & Poor’s opinion, offsetting these strengths include a debt burden and pro forma airline cost structure considered relatively high compared with that of peers in the rating category and of a similar size.
 
Charleston International Airport's (CHS) net revenues secure the bonds. The airport has $174.5 million in series 2013 bonds outstanding, which is its only debt. The bonds are fixed-rate.
 
The district operates Charleston International and two general aviation facilities. CHS is adjacent to the Charleston Air Force Base, which owns, operates, and maintains most of the airfield. Enplanement growth at the airport has been robust historically, with the initiation of new service boosting traffic trends through fiscal 2015. Traffic experienced 7.0 percent and 12.8 percent growth to 1.6 million enplanements in fiscal years 2014 and 2015, respectively.
 
The stable outlook reflects Standard & Poor’s expectation that the rating will not change in the next two years. It also reflects its view of CHS' strong enplanement trends as well as the expectation that enplanement levels will remain close to budget.
 
Although unlikely, Standard & Poor’s could raise the rating if the airport's financial metrics significantly outperformed its current budgeted figures, specifically debt service coverage and cost per enplanement, at levels its believes are sustainable.
 
The rating could be lowered if enplanements or CHS' pro forma debt service coverage and liquidity declined significantly.
 
RELATED CRITERIA AND RESEARCH
  • Criteria: Airport Revenue Bonds In The U.S. And Canada, Nov. 15, 2013
  • USPF Criteria: Methodology: Definitions And Related Analytic Practices
  • For Covenant And Payment Provisions In U.S. Public Finance Revenue
  • Obligations, Nov. 29, 2011
  • USPF Criteria: Assigning Issue Credit Ratings Of Operating Entities, May 20, 2015
  • Criteria: Use of CreditWatch And Outlooks, Sept. 14, 2009
Complete ratings information is available to subscribers of RatingsDirect at www.globalcreditportal.com and at www.spcapitaliq.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com.. Uee the Ratings search box located in the left column.
 
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