Fitch maintains Commerce RI’s RIAC revenue bonds at ‘BBB+’

FITCH RATINGS has affirmed the BBB+ rating on approximately $192.7 million in outstanding airport system revenue bonds for the R.I. Airport Corp. that were previously issued by the R.I. Economic Development Corp., now R.I. Commerce Corp.   / COURTESY R.I. AIRPORT CORPORATION
FITCH RATINGS has affirmed the BBB+ rating on approximately $192.7 million in outstanding airport system revenue bonds for the R.I. Airport Corp. that were previously issued by the R.I. Economic Development Corp., now R.I. Commerce Corp. / COURTESY R.I. AIRPORT CORPORATION

PROVIDENCE – Fitch Ratings has affirmed the BBB+ rating on approximately $192.7 million in outstanding airport system revenue bonds for the R.I. Airport Corporation that were previously issued by the R.I. Economic Development Corp., now R.I. Commerce Corporation.
Fitch also said the rating outlook remains stable, and reflects a small market airport that has maintained stable financial performance despite “weakening traffic trends” caused by route changes and competition in the New England area.

Enplanements dropped 3.8 percent at T.F. Green Airport in fiscal 2015, Fitch said. However, it said enplanements have shown signs of stabilization over the first three months of fiscal 2016, “declining by a marginal 0.7 percent.”
“Although traffic has continued to decline since 2006, the rate of decline has decreased, signifying that the airport may be reaching a base level of traffic in the near future,” Fitch said.

It said that “concentration risk” exists with Southwest Airlines – rated BBB with a positive outlook by Fitch – as it represented 46 percent of enplanements in the fiscal year that ended June 30.

Fitch said that a “prolonged decline in enplanement levels which cause airline costs to become unsustainable would lead to the consideration of a rating downgrade.”

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The rating also reflects the R.I. Airport Corp.’s “relatively high debt levels,” which are partially mitigated by “healthy reserve balances” of approximately $33.6 million, which is equivalent to 397 days cash, Fitch said.
Fitch also noted that the airport’s $170 million capital improvement plan is expected to mainly be funded with a combination of grants, new debt and passenger facility charge revenue. Future debt is expected to partially fund a runway extension, allowing the airport to enhance service options, and “hedge itself against capacity discipline,” Fitch said.

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