Approximately $169.3 million of rated debt post-sale
New York, December 04, 2015 --
Moody's Rating
Issue: Special Facility Revenue Refunding Bonds, Series 2015;
Rating: Baa1; Sale Amount: $169,270,000;
Expected Sale Date: 12-18-2015; Rating Description:
Revenue: Government Enterprise
Opinion
Moody's Investors Service ("Moody's") has assigned a Baa1 rating to New
York Transportation Development Corporation's ("NY TDC") $169.3
million Special Facility Revenue Refunding Bonds, Series 2015,
secured by loan payments made from Terminal One Group Association L.P.
("TOGA") to the NY TDC.
SUMMARY RATING RATIONALE
The Baa1 rating reflects the continued strong demonstrated demand for
Terminal One, the sound security provided by TOGA's strong step-up
like provision in the Facility Use and Lease Agreements with its signatory
carriers that allows the terminal to adjust signatory carrier tariffs
to recover all terminal facility costs, and relatively conservative
financial policy reflected in the terminal's low leverage that fully amortizes
in less than a decade with no new debt expected. These factors
help mitigate the risk presented by the highly competitive environment
within which Terminal One operates. Terminal One is one of two
terminals at John F. Kennedy International Airport capable of handling
the Airbus A380, one of the largest aircrafts in the industry,
which is expected to support future demand for the terminal.
The Baa1 rating is tempered by weaker covenants, including the lack
of a debt service reserve fund and no additional bonds test, despite
the lower total leverage post the refunding due to the use of the existing
$33.5 million debt service reserve fund to redeem an equal
amount of debt, lowering annual debt service costs. Moody's
understands that TOGA does not anticipate issuing additional debt until
the 2015 bonds are repaid.
OUTLOOK
The stable outlook reflects Moody's expectation that utilization of the
terminal will remain fairly stable given strong demonstrated demand and
limited capacity for additional service during peak periods.
WHAT COULD MAKE THE RATING GO UP
- Stronger bondholder security is provided such as a debt service
reserve fund and higher levels of liquidity
- TOGA is able to significantly increase utilization during off-peak
hours, further bringing down average airline payment per enplaned
passenger
WHAT COULD MAKE THE RATING GO DOWN
- Contract carrier revenues drop sharply
- There is a material deterioration in the signatory carriers'
credit profiles
- There is a material increase in leverage without corresponding
extension of the Facility Use & Lease Agreement
- The signatory carriers do not honor their step-up like
obligation under the Facility Use & Lease Agreement
- One or more of the signatory airlines files for bankruptcy protection
OBLIGOR PROFILE
Terminal One Group Association L.P., was organized
in 1994 as a limited partnership to lease, finance, construct,
maintain, and operate Terminal One at JFK International Airport
located in New York City. Terminal One serves a population of over
8 million people and handles about 12% of total traffic at the
airport. Each of the four signatory carriers owns a 24.75%
partnership interest in TOGA while the remaining 1% is owned by
the general partner, Terminal One Management, Inc.
("TOMI"), which is also equally owned by the four signatory carriers.
As laid out in the partnership agreement, TOGA will exist until
December 31, 2032, unless TOMI decides to extend its existence
to a date prior to or on December 31, 2067.
LEGAL SECURITY
The Series 2015 bonds are secured by the pledge of TOGA's unconditional,
step-up like obligation to pay loan payments under the Loan Agreement
with the New York City Transportation Development Corporation, in
an amount designed to cover debt service costs. A Cost Sharing
Agreement will be entered into between TOGA and the signatory carriers,
obligating the signatory carriers to make payments to TOGA in the same
proportion as their share was under the Facility Use and Lease Agreement.
Additionally, there is a 1.25 times DSCR rate covenant,
which can include cash on hand in the calculation. There is no
debt service reserve fund or additional bonds test. Moody's understands
that TOGA does not anticipate issuing additional debt until the 2015 bonds
are repaid.
USE OF PROCEEDS
The proceeds of the Series 2015 bonds along with $33.5 million
of funds held in the 2005 bonds' debt service reserve will be used to
fully refund outstanding Special Facility Revenue Refunding Bonds,
Series 2005, issued by the New York City Industrial Development
Agency ("NYC IDA") for net present value savings.
PRINCIPAL METHODOLOGY
The principal methodology used in this rating was Privately Managed Airports
and Related Issuers published in December 2014. Please see the
Credit Policy 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 rating action on the support provider and in relation to each particular
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.
Alexander Liu
Associate Analyst
Public Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Chee Mee Hu
MD - Project Finance
Public Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's assigns Baa1 to New York Transportation Development Corporation's Special Facility Revenue Refunding Bonds, Series 2015; stable outlook