S&P: Greater Orlando Aviation Authority, FL's 2016A-C Bonds Rated 'AA-'; Other Ratings Affirmed
"In part, the ratings reflect our view of a large origin and destination base, an expanding service area, and retention of a strong enplanement base," said S&P Global Ratings credit analyst Joseph Pezzimenti.
The 2016A and 2016B bond proceeds, together with other available GOAA funds, will finance a portion of the costs of the 2016 project; fund a deposit to the composite reserve subaccount; pay capitalized interest on the bonds; repay a portion of the approximately $160 million of draws made on GOAA's existing lines of credit; and pay some costs of issuance. The 2016C bond proceeds, together with other available GOAA funds, will advance refund all or a portion of GOAA's series 2009C and 2010A airport facilities revenue bonds outstanding.
GOAA operates the airport system, which is composed of Orlando International Airport (MCO) and Orlando Executive Airport (ORL), a general aviation airport. The City of Orlando owns both airports, and the authority operates them under a 50-year agreement expiring in 2065. In fiscal 2015, MCO ranked sixth among U. S. airports in terms of domestic O&D passengers, 15th in enplaned passengers, and second-busiest airport in Florida (behind Miami) in in terms of enplaned passengers. We consider Orlando a unique destination market, because MCO's air trade area has the largest concentration of theme parks in the nation, with several parks having opened major new attractions in recent years. Orlando continues to attract both domestic and international visitors, and had the highest number of visitors of any U. S. city over the past five years. The area's economy is also diversifying; the ongoing development of a large medical complex has increased employment in research, medical care, and education.
The stable outlook reflects our expectation that, over the next two years, MCO enplanement trends will remain generally favorable, given the local economy's diversity and the market's attractiveness. The outlook also reflects our expectations that management will proactively implement revenue and expense adjustments and reassess the timing of debt financing capital needs to ensure a manageable debt burden and generally good coverage (S&P Global Ratings-calculated), in the event demand growth does not meet expectations.
We consider it unlikely we will raise the rating in the next two years, given the authority's significant additional borrowing plans.
We could lower the rating in the next two years should enplanements weaken or fall below projected levels that we view as moderately aggressive, but achievable, or the planned increase in leverage erode coverage (S&P Global Ratings-calculated) significantly from currently high levels.