S&P Raises Rating on Lambert Airport Revenue Bonds, Refunding Moves Forward
Savings in excess of $20 million expected to be generated by the refunding
This article is 4 years old. It was published on June 6, 2019.
(St. Louis—June 6, 2019) S&P Global Ratings assigned its ‘A’ rating to the city’s upcoming refunding of St. Louis Lambert International Airport revenue bonds originally issued in 2009 and raised its rating on outstanding airport revenue bonds to ‘A’ from ‘A-’. The outlook for all city airport bond ratings by S&P is stable.
At the same time, Moody’s Investor Services affirmed its rating for the city’s airport bonds at ‘A2’ with a stable outlook. Moody’s upgraded the city’s outstanding airport revenue bonds in 2018 and had been apprised of the planned 2019 financing prior to its upgrade.
“This latest airport bond rating upgrade from S&P affirms the strong financial position and operations at St. Louis Lambert International Airport,” said St. Louis Comptroller Darlene Green. “The marketplace is responding to our successes with increasing confidence and I commend the airport management and staff for their excellence.”
The ratings assessment noted St. Louis Lambert International Airport has strong origin and destination demand, an extremely strong economic profile in its service area, and “a very strong management team that has sufficiently managed risks to ensure the airport’s steady financial and operational performance.”
“This is a victory for Lambert Airport, the people of St. Louis and the flying public,” said Comptroller Green. “Refunding the 2009 bonds will leverage favorable market conditions and the airport’s improved credit rating—putting in excess of $20 million back into the airport’s coffers that otherwise would go to pay interest expenses.”
The 2009 bonds were issued at a rate of 6.5 percent; today, favorable market conditions and the airport’s improved credit rating are expected to generate an interest rate less than 3 percent.
“In the past year, this airport has secured the best bond ratings in a decade and this newest bond rating upgrade further amplifies the success of our long-term focus on reducing costs, strengthening our financial sustainability and maintaining safe and efficient operations,” said St. Louis Director of Airports Rhonda Hamm-Niebruegge.
S&P reported that it expects the airport to maintain debt capacity and liquidity at levels considered very strong, even with plans to fund $22 million in capital improvements with the 2019 bond issuance that closes later this month.
Legislation enabling the 2019 bond issuance passed the city’s Board of Estimate and Apportionment unanimously on April 30 and received unanimous final passage by the city’s Board of Aldermen on May 31. The airport’s five-year capital plan, approved by the Airport Commission in 2016, stipulated a 2019 issuance refunding the 2009 airport revenue bonds.
In the prior fiscal year, St. Louis Lambert International Airport lowered its cost per enplaned Passenger (CPE) to $8.87 (FY2018), down from a FY2013 CPE of $13.77. The Airport surpassed 15.6 million passengers in 2018, its highest level since 2003. The Airport has experienced 44 months of month-over-month passenger growth with 2019 total passenger growth trending at a three percent increase through April.
Comptroller Darlene Green is the chief fiscal officer of the City of St. Louis and is charged with safeguarding the city’s credit rating and with protecting taxpayer dollars. Visit www.stlouis-mo.gov/comptroller to learn more about the Office of the Comptroller.