Mayor's Office Press Release
City Airport Bonds Upgraded/Utility System Bond Refi Saves Millions
February 12, 2016 -- Standard and Poor’s Ratings Services has upgraded its bond rating for the Houston Airport System (HAS) from ‘A’ to ‘A+’ with a stable outlook. The rating agency also affirmed its ‘AA-’ long-term rating on the airport system’s subordinate-lien bonds and its ‘AAA/A-2’ ratings on the system’s existing joint criteria variable rate demand obligation debt. The outlook for the long-term rating is also stable.
In announcing the rating upgrade, the S & P cited HAS’:
- Strong market position in a large, growing, and diversifying service area
- Strong liquidity, as of June 30, 2015, of $457 million or approximately 591 days' cash
- Experience with capital program implementation and the planned investment in facilities by United Airlines Inc.
A news release from the rating agency stated, “the stable outlook reflects our expectation that during the next two years enplanement levels will be stable or trend higher and that the system’s capital improvement plan and associated debt needs will prove manageable in terms of financial resources.”
The rating upgrade for HAS comes on the heels of a successful bond refinancing for the City’s Combined Utility System (CUS), which manages Houston’s water and wastewater operations. The deal, which totaled just under $1 billion, included funding for new projects and refunding of existing debt. The net present value debt service savings on the refunding portion of the transaction totals $116.7 million, which equates to a percentage savings of 14.6% of the refunded principal. The savings will be realized over a period of 23 years.
“This is excellent news at a time when the City is facing increasing budgetary pressures due to the economic downturn,” said Mayor Turner. “Despite these obstacles, the rating agencies and the bond markets see reason to remain optimistic about City finances.”
The Houston Airport System owns and operates George Bush Intercontinental Airport, William P. Hobby Airport and Ellington Airport. HAS is funded entirely by user fees paid by the airlines and passengers. Funding for the CUS comes from water and wastewater ratepayers.