KBRA assigns an A + rating to the Allegheny County Airport Authority (Pittsburgh International Airport); Outlook is stable

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NEW YORK–(COMMERCIAL THREAD) – Kroll Bond Rating Agency (KBRA) assigns a long-term rating of A + with a stable outlook to Airport Revenue Bonds, Series 2021A (AMT) and Airport Revenue Bonds, Series 2021B (Non-AMT) issued by the airport of Allegheny County Authority (Pittsburgh International Airport). The Allegheny County Airport Authority operates Pittsburgh International Airport (PIT), a commercial international airport, and Allegheny County Airport (AGC), a general aviation relief airport to PIT.

An evaluation report will follow.

Key Credit Considerations

KBRA continues to monitor the direct and indirect impacts of the COVID-19 virus. Click on here to access KBRA’s ongoing research on the subject.

The rating was assigned based on the following key credit considerations:

Positive credits

  • An innovative management team that increased the potential for revenue diversification, including air freight growth and airport real estate development.

  • The lack of concentration of airlines, strong sources of non-aeronautical revenue and the nature of the origin and destination of airport activity contribute to stability.

  • The diverse regional economy benefits from a relatively young and highly educated workforce, low unemployment and growth in strategic employment sectors, although a persistent population decline compensates somewhat these positive demographics.

Credit challenges

  • The Authority, which is currently bidding and awarding contracts for construction lots, is exposed to construction risk and performance risk on the $ 1.35 billion PGT.

  • The timing of a sustained recovery in passenger traffic to pre-pandemic levels remains unknown.

  • The projected leverage effect is very high. Some sources of income that can be considered “other promised income” under the MTI are volatile.

Sensitivity Assessment

For upgrading

  • Completion of the $ 1.35 billion TMP and concurrent projects on time and on budget, allowing recognition of expected operating cost savings and keeping airline costs manageable.

  • Strong upturn in traffic which generates net revenues which, along with other promised revenues, maintain reasonable coverage and allow air costs to be maintained at moderate levels.

To downgrade

  • Increased construction costs or delays resulting in significant cost overruns.

  • Weak upturn in traffic that does not produce net revenues which, along with other promised revenues, are sufficient to maintain compliance with tariff clauses, requiring significant increases in costs for airlines.

To access the assessments and relevant documents, click on here.

Disclosures

A description of all substantially significant sources that were used to prepare the credit rating and information about the method (s) (including significant models and sensitivity analyzes of the relevant key rating assumptions, if any) used to determine the credit rating is available in the information disclosure form (s) located here.

Information on the meaning of each rating category can be located here.

Further information relating to this rating measure is available in the information disclosure form (s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures can be found at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the United States Securities and Exchange Commission as NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a credit rating agency with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a credit rating agency with the UK Financial Conduct Authority under the temporary registration regime. In addition, KBRA is appointed as the designated rating agency by the Ontario Securities Commission for issuers of asset-backed securities to file a simplified prospectus or a shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a credit rating provider.


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