Moodys.com
Please Note
We brought you to this page based on your search query. If this isn't what you are looking for, you can continue to Search Results for ""
The maximum number of items you can export is 3,000. Please reduce your list by using the filtering tool to the left.
Close
Close
Email Research
Recipient email addresses will not be used in mailing lists or redistributed.
Recipient's
Email

Use semicolon to separate each address, limit to 20 addresses.
Enter the
characters you see
Close
Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
Close
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
Already a customer?
LOG IN
Don't want to see this again?
REGISTER
OR
Accept our Terms of Use to continue to Moodys.com:

PLEASE READ AND SCROLL DOWN!

 

By clicking “I AGREE” [at the end of this document], you indicate that you understand and intend these terms and conditions to be the legal equivalent of a signed, written contract and equally binding, and that you accept such terms and conditions as a condition of viewing any and all Moody’s inform​ation that becomes accessible to you [after clicking “I AGREE”] (the “Information”).   References herein to “Moody’s” include Moody’s Corporation, Inc. and each of its subsidiaries and affiliates.

 

Terms of One-Time Website Use

 

1.            Unless you have entered into an express written contract with Moody’s to the contrary, you agree that you have no right to use the Information in a commercial or public setting and no right to copy it, save it, print it, sell it, or publish or distribute any portion of it in any form.               

 

2.            You acknowledge and agree that Moody’s credit ratings: (i) are current opinions of the future relative creditworthiness of securities and address no other risk; and (ii) are not statements of current or historical fact or recommendations to purchase, hold or sell particular securities.  Moody’s credit ratings and publications are not intended for retail investors, and it would be reckless and inappropriate for retail investors to use Moody’s credit ratings and publications when making an investment decision.  No warranty, express or implied, as the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any Moody’s credit rating is given or made by Moody’s in any form whatsoever.          

 

3.            To the extent permitted by law, Moody’s and its directors, officers, employees, representatives, licensors and suppliers disclaim liability for: (i) any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with use of the Information; and (ii) any direct or compensatory damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud or any other type of liability that by law cannot be excluded) on the part of Moody’s or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with use of the Information.

 

4.            You agree to read [and be bound by] the more detailed disclosures regarding Moody’s ratings and the limitations of Moody’s liability included in the Information.     

 

5.            You agree that any disputes relating to this agreement or your use of the Information, whether sounding in contract, tort, statute or otherwise, shall be governed by the laws of the State of New York and shall be subject to the exclusive jurisdiction of the courts of the State of New York located in the City and County of New York, Borough of Manhattan.​​​

I AGREE
Rating Action:

Moody's confirms Baa3 rating on New York Transportation Development Corporation, NY's Special Facility Revenue Refunding Bonds, Series 2015 (Terminal One Group Association, L.P. Project); outlook is negative

09 Sep 2020

New York, September 09, 2020 -- Moody's Investors Service, ("Moody's") has confirmed the Baa3 rating on New York Transportation Development Corporation, NY's Special Facility Revenue Refunding Bonds, Series 2015 (Terminal One Group Association, L.P. (TOGA) Project, or JFK T1). These actions conclude the review for downgrade that was initiated on June 8, 2020. The rating outlook is negative.

RATINGS RATIONALE

The Baa3 rating and negative outlook reflect the ongoing liquidity support from the signatory airlines since July 2020, as it demonstrates their ongoing commitment to the terminal and the NY market.

According to management, the signatory airlines have collectively provided financial support in July and August, with additional support anticipated for the remainder of the year. Our rating action expects that the signatory airlines will honor the terms of the signatory airline agreement and continue to support the terminal during this challenging period, as it provides them access to a major international gateway in the long-term, at significantly more economic terms than leasing gates at other terminals. Specifically, the signatory airline agreement with the terminal includes a step-up provision where the signatory airlines Compagnie Nationale Air France ("Air France", 34.84%), Japan Airlines International Company Ltd. ("JAL", 18.35%), Korean Airlines Co., Ltd. ("KAL", 16.86%), Deutsche Lufthansa Aktiengesellschaft ("Lufthansa", Ba1 Ratings Under Review - Down, 29.96%), covers any shortfall with respect to the terminal's debt service obligations on a joint and several basis allocated based on their contractual shares. In that regard, we note that the size of the payments required to support the terminal and its debt service costs are relatively small in comparison to the signatory airlines' annual operations.

We note however that while the support of the signatory airlines is viewed positively from a credit perspective, each of the airlines' revenues and cash flow continue to be negatively impacted by the coronavirus' effect on air travel resulting in their needing varying degrees of financial support from their respective governments during this time, a positive credit consideration. In that regard, any indication of weakening support by the signatory airlines to the terminal or their commitment to the NY market would negatively impact the rating. This is particularly the case since the obligor's credit profile is solely reliant upon the step-up provision from the signatory carriers to mitigate the lack of a debt service reserve (DSR) or other meaningful liquidity source in the current unique volatile operating environment.

JFK T1 has been directly affected given the terminal's international only traffic, with more than 65% of its enplanements derived from Europe and Asia. As of August 2020, enplanements for the year are down 73% over the same period in the prior year. Although several airlines have resumed flights at the airport on a limited basis, including all of the signatory airlines, enplanements for the September through December period are expected to be down 67% over the same period in the prior year. Management anticipates 2021 enplanements to be around 70-80% of FY 2019's level, a level that we estimate would enable the project to meet its cash flow requirements without the support of the signatory airlines. Our view incorporates the likelihood of lower enplanements during 2021 resulting in the need for continued signatory airline support for a portion of 2021

Historically, the terminal had consistently maintained cash balances of around $20 million, which had proved adequate during regular operating periods. JFK T1 ended 2019 with $30.5 million, equating to 77 days cash of hand, which has been used to augment operations during these challenging times. As of September 30, 2020, the terminal had approximately $7 million in unrestricted cash, in addition to minimum annual guarantees (MAG) from contract carriers generally secured by cash or letters of credit equivalent to two-months-worth of fees as well as amounts set aside in restricted accounts with the bond trustee. TOGA has made its monthly deposits to the bond trustee of around $2.4 million per month for the first nine months of 2020, which was used to make its $1.97 million debt service payment on July 1, 2020. The remaining amounts with the bond trustee, which approximates $19.7 million will be used to make the larger payment of $26.97 million, which includes principal, on January 1, 2021. TOGA will deposit approximately $7.2 million in the bond trustee account through the remainder of 2020 which along with operations and maintenance expenditures are expected to be funded in large part by the four signatory carriers.

TOGA's finances are managed on a sum sufficient basis. The indenture permits unlimited rolling coverage to meet the 1.25x rate covenant, and the signatory airline agreements require rates be set at a level sufficient to ensure that a reserve equal to 25% of total costs is maintained. The debt service coverage ratio (DSCR), as calculated by Moody's has historically measured around 1.0x to 1.5x on a net revenue basis, given the terminal's cost minimization business model which typically only allows it to charge and collect rates from the airlines to cover its operating and debt service costs.

The negative outlook also considers the prolonged negative enplanement impact which is anticipated to last through 2020 and into 2021, coupled with the lack of a dedicated debt service reserve or any other meaningful liquidity source at JFK T1, which have caused the terminal to require external liquidity support from its signatory airlines since July, to cover its cash flow shortfalls. Enplanement levels are not anticipated to return to FY 2019's levels until after 2021 and the terminal will be primarily relying on its signatory airlines for liquidity support until enplanement levels normalize.

The spread of the coronavirus outbreak continues to sustain a severe and unprecedented credit shock across many sectors, regions and markets. The airport sector is one of the sectors most significantly affected by the shock given its exposure to travel restrictions and sensitivity to consumer demand and sentiment. Moody's regards the coronavirus outbreak as a social risk under its Environmental, Social, & Governance (ESG) framework, given the substantial implications for public health and safety that has resulted in severe travel restrictions, cancellation of airline routes, travel bans, border closings and new requirements for health and safety at airports.

RATING OUTLOOK

The negative outlook reflects the expectation that enplanements will continue to be well below historical levels through 2020 and into 2021, leading to the continued reliance for financial support from the terminal's signatory airlines for the foreseeable future.

FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATING

- Given the current market situation we do not anticipate any short-term positive rating pressure. An indication that the market situation has begun to stabilize leading to a gradual recovery of enplanement levels nearing pre-outbreak levels over the next 6-12 months could lead to stabilization of the outlook.

- Clear demonstration of signatory airlines' continued ability and willingness to support their obligations under the Facility Use & Lease Agreement over the next 18 months.

- Higher levels of sustained liquidity at JFK T1 to withstand a prolonged environment of enplanement volatility could lead to stabilization of the outlook.

FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATING

- Indications that signatory carriers are unable or unwilling to honor their step-up like obligation under the Facility Use & Lease Agreement when needed

- Sustained significant travel reduction from the coronavirus outbreak that continue well beyond current expectations

- Contract carrier revenues drop sharply and/or carriers are not timely in their payments

- A material deterioration in the signatory carriers' credit profiles

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 has been entered 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.

PROFILE

Terminal One Group Association L.P.(TOGA), was organized in 1994 as a limited partnership to lease, finance, construct, maintain, and operate Terminal One at JFK International Airport (JFK T1) located in New York City. JFK T1 serves a population of over 8 million people and handles about 12% of total passenger traffic at the airport. Each of the four signatory carriers - Compagnie Nationale Air France ("Air France"), Japan Airlines International Company Ltd. ("JAL"), Korean Airlines Co., Ltd. ("KAL"), and Deutsche Lufthansa Aktiengesellschaft ("Lufthansa") - 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.

TOGA's existing "site lease" of the current JFK T1 location expires on May 27, 2023 and TOGA has the option to request a lease extension until May 27, 2028. Given the upcoming large expansion of the terminal expected to begin in 2020 with a new group of equity sponsors, and a new lease already approved by the Port Authority board this past November, we do not anticipate the current lease being extended. The existing debt matures on January 1, 2023, which is prior to the current lease expiration.

METHODOLOGY

The principal methodology used in this rating was Privately Managed Airports and Related Issuers published in September 2017 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1092224. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.

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.

The rating has been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.

This rating is solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website 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.

Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1133569.

At least one ESG consideration was material to the credit rating action(s) announced and described above.

The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the EU and is endorsed by Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.

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.

Jennifer Chang
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

Angelo Sabatelle
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.
© 2021 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S CREDIT RATINGS AFFILIATES ARE THEIR CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE APPLICABLE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS (“ASSESSMENTS”), AND OTHER OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS, AND PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS OR PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.

MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.

All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing its Publications.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.

NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING, ASSESSMENT, OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.

Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any credit rating, agreed to pay to Moody’s Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $5,000,000. MCO and Moody’s Investors Service also maintain policies and procedures to address the independence of Moody’s Investors Service credit ratings and credit rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody’s Investors Service and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.

Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY550,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

Moodys.com