Green Airport's improved bond rating expected to translate into debt savings

Posted 1/17/19

The Rhode Island Airport Corporation isn't looking to borrow funds for a major capital improvement at the movement, says the organization's President and CEO Iftikhar Ahmad, but when it does, interest costs are expected to be less than what they could

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Green Airport's improved bond rating expected to translate into debt savings

Posted

The Rhode Island Airport Corporation isn’t looking to borrow funds for a major capital improvement at the movement, says the organization’s President and CEO Iftikhar Ahmad, but when it does, interest costs are expected to be less than what they could have been.

That promises to be the net effect of the recent announcement from Standard & Poor’s Global Ratings that is has raised the RIAC’s revenue bond rating to “A” from “BBB.” This change reflects a two-notch jump in S&P’s ratings system.

Ahmad said Tuesday RIAC could expect to see the benefits of the improved rating this year, as the organization is looking to refinance more than $22 million of its debt.

While a number can’t be pinned on possible savings, Ahmad is buoyed by the development.

“These changes are happening because of a steadfast commitment to change the direction of the airport, which endured a decline in enplanements, routes and airlines over a 10-year period up until 2015,” he said in a statement. “Since that time, the board, the management team and the employees of RIAC have worked to resurrect the airport in a meaningful way that is truly paying dividends for the State of Rhode Island. None of this could have been accomplished without the unwavering support of Governor Raimondo in addition to the support and collaboration we receive from Commerce Secretary Pryor.”

Raimondo, Pryor and Jonathan Savage, RIAC board chair, likewise greeted the news enthusiastically.

In its report, S&P said its strong financial performance assessment “reflects our expectation that DSC (debt service coverage) as per our calculations, will remain in the strong category. Airport operating revenues have increased 9.8 percent in fiscal 2018 to $71.8 million, and operating expenses, before depreciation, have increased 5.6 percent to $41.9 million, demonstrating PVD’s general stability.”

The report goes on to say, “we assess RIAC’s debt and liabilities capacity as very strong based on a declining debt burden and strong net revenue performance that translated to total debt-to-net-revenue metrics of under 10 times for the previous three fiscal years.”

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