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Global Credit Research - 04 Jun 2010
Approximately $7.4 billion of debt securities affected
Toronto, June 04, 2010 -- Moody's Investors Service has changed the outlook for the Greater
Toronto Airports Authority (GTAA or the Authority) to positive from stable.
It has also affirmed the A2 rating applicable to the Authority's
senior secured debt and assigned an A2 rating to the proposed 30 year
$400 Million senior secured note issue. The proceeds of
the bond issue will be used to repay the maturing July 19, 2010
$600 million bond.
The change in outlook from stable to positive and the rating affirmation
reflect a number of positive developments in evidence at GTAA.
First of all, the fundamental role played by Pearson airport in
the Canadian air transportation infrastructure was amply evidenced by
the traffic resiliency demonstrated during the last economic downturn.
GTAA's passenger traffic declined by 6% which was generally
in line with the industry and better than expected by Moody's based
on previous experience during recessions and/or events. In addition,
since the early part of 2010, passenger traffic has started to recover
(+1.1% to end of March). Second, GTAA's
major redevelopment program was completed in 2007 and capital expenditures
remain modest at less than $100 million annually in the 2010-2011
period. A decision on Pier G will be demand driven and is not expected
until the middle of the decade. That reduced capital expenditure
profile will translate into stable or even slightly decreased debt levels.
In turn, that stable or decreased debt level, combined with
a good control on operating costs and expected moderate traffic growth
should allow GTAA to continue to maintain or even further decrease aeronautical
rates for the foreseeable future. Moody's views the recently
implemented aeronautical rate decreases and the possible ones in the future
as being positive in order to support GTAA's goal to attract additional
flights and airlines to Pearson. Thirdly, GTAA continues
to demonstrate very good access to debt capital markets even under very
strained market circumstances which bodes well for its ability to continue
refinancing its debt maturities. Finally, GTAA continues
to maintains a solid level of liquidity by way of approximately $1
billion in reserves, $500 million in unused credit facilities
and cash. That level of liquidity is solid in view of the diminished
capital expenditure requirements, the lack of remaining refinancing
need in 2010 and the positive signs in evidence in the airline industry.
GTAA's ratings continue to reflect Pearson's role in serving
the largest metropolis in Canada as well as the relative lack of competition
for airports in Canada and finally the fundamental rights of Canadian
airport authorities to set their rates and fees to cover costs and debt
service. These strengths are to a certain degree offset by the
very weak credit metrics exhibited by GTAA.
The principal methodology used in rating this issuer was the methodology
applicable to operational airports outside of the United States which
can be found at www.moodys.com in the Rating Methodologies
sub-directory under the Research & Ratings tab. Other
methodologies and factors that may have been considered in the process
of rating this issuer can also be found in the Rating Methodologies sub-directory
on Moody's website.
The last rating action was on August 28, 2007 when GTAA's
ratings were affirmed.
Series 1997-3 6.45% Revenue Bonds maturing December
3, 2027: $375 million
Series 1999-1 6.45% Revenue Bonds maturing July 30,
2029: $444 million
Series 2000-1 7.05% Medium Tern Notes maturing June
12, 2030: $550 million
Series 2000-2 6.70% Medium Term Notes maturing July
19, 2010: $600 million
Series 2001-1 7.10% Medium Term Notes maturing June
4, 2031: $500 million
Series 2002-1 6.25% Medium Term Notes maturing January
30, 2012: $500 million
Series 2002-2 6.25% Medium Term Notes maturing December
13, 2012: $475 million
Series 2002-3 6.98% Medium Term Notes maturing October
15, 2032: $550 million
Series 2004-1 6.47% Medium Term Notes maturing February
2, 2034: $600 million
Series 2005-1 5.00% Medium Term Notes maturing June
1, 2015: $350 million
Series 2005-3 4.70% Medium Term Notes maturing February
15, 2016: $350 million
Series 2006-1 4.40% Medium Term Notes maturing February
28, 2011: $250 million
Series 2007-1 4.85% Medium Term Notes maturing June
1, 2017: $450 million
Series 2008-1 5.26% Medium Term Notes maturing April
17, 2018: $500 million
Series 2008-2 5.89% Medium Term Notes maturing December
6, 2013 $325 million
Series 2009-1 5.96% Medium Term Notes maturing November
20, 2019 $600 million
GTAA is a non share capital corporation responsible for the operation
of the Pearson International Airport (Pearson), including the development
of certain airport lands, and is headquartered in Toronto,
Chee Mee Hu
Corporate Finance Group
Moody's Investors Service
Moody's changes GTAA's outlook to positive, affirms A2 rating and assigns an A2 rating to proposed $400 million debt issue
Catherine N. Deluz
VP - Senior Credit Officer
Corporate Finance Group
Moody's Canada Inc.
No Related Data.
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