Kroll Bond Rating Agency (KBRA) assigns a long-term rating of A+ with a Stable Outlook to the Airport Revenue Bonds, Series 2021A (AMT) and Airport Revenue Bonds, Series 2021B (Non-AMT) issued by Allegheny County Airport Authority (Pittsburgh International Airport). The Allegheny County Airport Authority manages Pittsburgh International Airport (PIT), a commercial, international airport and Allegheny County Airport (AGC), a general aviation reliever airport to PIT.
A rating report will follow.
Key Credit Considerations
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The rating was assigned because of the following key credit considerations:
Credit Positives
- Innovative leadership team that has increased the potential for revenue diversification, including growth in air cargo and airport real estate development.
- Absence of airline concentration, strong non-aviation revenue sources and the origin and destination nature of Airport activity aid stability.
- The diversified regional economy benefits from a relatively young, highly educated workforce, low unemployment, and growth in strategic employment sectors, although a persistent decline in population somewhat offsets these positive demographics.
Credit Challenges
- The Authority, which is currently bidding and awarding contracts for construction packages, is exposed to construction risk and execution risk on the $1.35 billion TMP.
- The timing of a sustained recovery in passenger traffic to pre-pandemic levels remains unknown.
- Projected leverage is very high. Certain revenue sources that may be deemed “Other Pledged Revenues” under the MTI are volatile.
Rating Sensitivities
For Upgrade
- Completion of the $1.35 billion TMP and concurrent projects on time and within budget, enabling recognition of anticipated operating cost savings and maintenance of manageable airline costs.
- Strong traffic recovery that produces net revenues which, together with other pledged revenues, maintains reasonable coverage and allows maintenance of moderate airline costs.
For Downgrade
- Construction cost escalation or delays that entail significant cost overruns.
- Weak traffic recovery that fails to produce net revenues which, together with other pledged revenues are sufficient to maintain rate covenant compliance, necessitating significant increases in airline costs.
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Disclosures
A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining 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 disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.
About KBRA
Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority pursuant to the Temporary Registration Regime. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.
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