PROVIDENCE – The R.I. Commerce Corp. announced on Tuesday that the world’s largest credit rating agency has raised the rating for revenue bonds issued for the R.I. Airport Corp. from “BBB+” to “A.”
The R.I. Airport Corp., a quasi-public agency, operates the Ocean State’s airport system, which includes the Rhode Island T.F. Green International Airport, as well as the North Central, Quonset, Block Island, Westerly and Newport airports.
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S&P Global Ratiings said the improved rating reflects its view of a strong rebound in national air travel, “as well as a recovery in RIAC passenger traffic in 2022 and 2023, following a steep decline during the COVID-19 pandemic.” The recovery, S&P said, should restore car rental activity and financial metrics to near pre-pandemic levels. The outlook is stable, S&P said in its April 21 ratings report.
In January, S&P raised its long-term and underlying ratings for the R.I. Airport Corp. from A- to A, with a stable bond outlook.
“We appreciate S&P’s affirmation of RIAC strong metrics of low cost, increasing enplanements, and excellent liquidity,” said Iftikhar Ahmad, CEO and president of the R.I. Airport Corp. “We are thankful to all among our state’s leadership who have worked in partnership with us to help our aviation-related economy grow and prosper.”
The bonds are secured by a first lien on net pledged revenue after payment of the corporation’s portion of intermodal facility operating expenses, according to S&P. Those expenses exclude exclusive rental car company space. A backup pledge from the rental car companies pays the operating and maintenance expenses of the facility and debt service, if needed.
General airport revenue is not pledged to RIAC’s special facility bonds.
Breeze Airways, which arrived at T.F. Green in July 2021, plans to expand the number of routes it offers out of its Warwick-based hub from 12 to 20 over the next five years.
RIAC projects that passenger traffic will be fully back to 2019 levels by the end of the summer of 2023. It expects a return in rental car transaction days to pre-pandemic levels at T.F. Green.
S&P said that key credit weaknesses include T.F. Green’s single-asset exposure, with a narrow revenue stream tied to a subset of arriving passengers that rent vehicles at the airport, and potential inherent vulnerabilities related to reliance on the rental car industry.
Sam Wood is a staff writer at PBN. Contact him at Wood@PBN.com.
