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Rating Action:

Moody's assigns Aa2 to Massachusetts Port Auth.'s Ser. 2017A; affirms Aa2 on parity debt; outlook stable

14 Jun 2017

New York, June 14, 2017 -- Issue: Revenue Bonds, Series 2017-A (AMT); Rating: Aa2; Rating Type: Underlying LT; Sale Amount: $170,600,000; Expected Sale Date: 06/19/2017; Rating Description: Revenue: Government Enterprise;

Summary Rating Rationale

Moody's Investors Service assigns a Aa2 to Massachusetts Port Authority's (Massport) Revenue Bonds, Series 2017-A (AMT), and affirms the Aa2 on parity debt. Moody's also maintains the A1 rating on Massport's Passenger Facility Charge (PFC) revenue bonds and the A3 on the Consolidated Car Rental revenue bonds that both carry a stable outlook.

The Aa2 is based on the credit fundamentals of the authority, which are currently among the strongest of Moody's rated airports. The authority has a strong market position in a robust and diverse economy and is expected to maintain above-average financial metrics for the foreseeable future despite substantial additional planned debt to fund its 2017-2021 capital program. Massport's enplanement base remains among the most diversified in the US airport sector with the largest market share by jetBlue at 26.6% and the airport has had above average growth in recent years, which is continuing into 2017. The high rating is tempered by planned additional $586.9 million in debt through 2021, and additional debt expected immediately after the current capital program timeframe with the completion of 5,000 parking spaces and Terminal E improvements. Also, we expect that liquidity will decline to levels below the sector average and that Massport's revenues may be diverted to non-core transportation projects in the future.

We maintain the A1 rating on Massport's Passenger Facility Charge (PFC) revenue bonds and the A3 on the Consolidated Car Rental revenue bonds that both carry a stable outlook. The PFC bonds mature on July 1, 2017.

Rating Outlook

The stable rating outlook is based on our expectation that Massport revenues will continue to provide for debt service coverage above 2.0 times and that financial liquidity will remain above 300 days cash on hand as it debt finances about $586.9 million of its capital program through 2021.

Factors that Could Lead to an Upgrade

Completion of capital plan without greater than currently forecasted negative impacts to financial metrics, including DSCRs and CPE

Sustained strengthening in the airport's market position as the service area economy continues to expand and add jobs

Sustained enplanement growth and continued growth of international enplanements

Maintenance of financial liquidity well above 600 days cash on hand

Removal of exposure to non-self-supporting transportation projects

Factors that Could Lead to a Downgrade

Sustained DSCRs below 2.0 times on a Moody's net revenue calculated bases

Increases in airline CPE significantly above those in current forecast

With additional planned debt for the capital program debt to operating revenues above 3.5 times

Financial liquidity that falls below 250 days cash on hand

Increasing political pressure to support transportation initiatives that do not enhance Massport revenues

Operational disruptions due to new capital projects

Legal Security

The revenue bonds are secured by the net revenues of the authority.

Use of Proceeds

The 2017A bonds will be issued to finance a portion of Massport's $2 billion FY 2017-2021 capital program, including airline space optimization of Terminal B and gate additions and improvements in Terminal E.The 2017A bonds will also refund the authority's Series 2007C and 2010D revenue bonds for estimated net present value savings of approximately 3% of par value of the refunded bonds.

Obligor Profile

The authority is a body politic and corporate and public instrumentality of the Commonwealth of Massachusetts, which was created pursuant to Chapter 465 of the Massachusetts Acts of 1956. The authority is divided into two projects which it owns, operates, and manages: airport facilities and port facilities. The airport facilities consist of Boston-Logan International Airport, Laurence G. Hanscom Field, and Worchester Regional Airport. The port facilities consist of the Port of Boston, which includes cargo and cruise terminals, along with the management of commercial real estate properties.

Methodology

The principal methodology used in this rating was Publicly Managed Airports and Related Issuers published in November 2015. 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 or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt 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.

Maria Matesanz
Lead Analyst
Project Finance
Moody's Investors Service, Inc.
7 World Trade Center
250 Greenwich Street
New York 10007
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.
250 Greenwich Street
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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