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Rating Action:

Moody's affirms A3 rating on Austin, TX - Airport Rental Car Special Facility's outstanding revenue bonds; outlook is stable

19 Dec 2019

Approximately $143.77 million of debt affected

New York, December 19, 2019 -- Moody's Investors Service has affirmed the A3 on Austin (City of) TX - Airport Rental Car Special Facility's $143.77 million of outstanding revenue bonds. The outlook is stable.

RATINGS RATIONALE

The A3 rating reflects adequate financial metrics that are below but near the median and operational metrics, such as transaction days per O&D enplanement, that are generally weaker than most rated consolidated rental car facilities. The rating also reflects opposing trends of quickly growing enplanements at the Austin-Bergstrom International Airport and a declining per enplanement trend that highlight increasing competition for rental cars from alternate modes of travel. Transaction days per O&D enplanement has fallen to 0.35x in fiscal 2019 from 0.42x in fiscal 2016, in line with drops at other facilities but below the 0.4x median of rated facilities. Debt service coverage ratio by CFC collections of 1.77x in fiscal 2019 nearly matches the sector median of 1.86x. Additionally, the moderately ascending debt service results in the second largest ratio of MADs to current debt service (1.6x) in Moody's rated portfolio, highlighting the need of the facility for continued growth to maintain financial metrics. The rating also considers that relatively high leverage (measured by debt per transaction day) and relatively low liquidity (measured by CFC balances to MADS) will remain weaknesses compared to median over the next three years.

RATING OUTLOOK

The stable outlook is based on our expectation that transaction days will continue to grow at a moderate pace which, is necessary to maintain debt service coverage ratios on the increasing annual debt service requirements.

FACTORS THAT COULD LEAD TO AN UPGRADE

- DSCRs, without the benefit of account balances, over 2.0x on a sustained basis

- Continued and sustained growth in CFC collections

- Increase in liquidity

FACTORS THAT COULD LEAD TO A DOWNGRADE

- Significant transaction day declines

- DSCRs, without the benefit of account balances, below 1.50x on a sustained basis

LEGAL SECURITY

Pledge of the Trust Estate established under the Trust Indenture which includes CFC collections, contingent fees paid by the rental car companies (RACs) and prior CFCs, prior facility rentals and prior contingency fees paid under the previous concession agreements. Bondholders are protected by a rate covenant that requires CFC collections and contingent fees to remain at a level at least 125% of annual debt service requirements and administrative costs. An additional bonds test protects bondholders from revenue dilution with a requirement for meeting the rate covenant for all bonds including the additional bonds on either a projected basis for the earlier of three years after project completion or the end of capitalized interest, or for the previous 12 of 18 months. Bonds additionally benefit from a cash funded debt service reserve fund equal to the lesser of 10% par, 125% average annual debt service, or maximum annual debt service (MADS) and a debt service coverage fund (cash funded to 25% of MADS).

PROFILE

Austin-Bergstrom International Airport, situated on a former air force base, was constructed in 1999 to replace Robert Mueller Municipal Airport. The airport is currently the fourth largest medium hub airport in the US. The airport has two parallel north-south runways at 9,000 and 12,250 feet respectively that are capable of handling all commercial service aircraft that are currently in service.

Completed in 2015, the five-level CONRAC facility consists of 4 levels of space for the RACs to use for customer ready/return areas, quick turnaround areas (QTA) to service vehicles, a customer service area, and additional vehicle space and storage. The new building includes expanded terminal area and one ground level public parking, which added approximately 1,058 of parking spaces.

METHODOLOGY

The principal methodology used in this rating was Publicly Managed Airports and Related Issuers published in March 2019. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Earl Heffintrayer
Lead Analyst
Project Finance
Moody's Investors Service, Inc.
Plaza Of The Americas
600 North Pearl St. Suite 2165
Dallas 75201
US
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Kurt Krummenacker
Additional Contact
Project Finance
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Releasing Office:
Moody's Investors Service, Inc.
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New York, NY 10007
U.S.A
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

No Related Data.
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