Port of Portland, OR's Passenger Facility Charge Bonds Upgraded To 'A+' From 'A' On Criteria Application


NEW YORK (S&P Global Ratings) May 16, 2019--S&P Global Ratings raised long-term and underlying ratings on Port of Portland, Ore.'s passenger facility charge (PFC) revenue bonds to 'A+' from 'A'. The outlook is stable.
The upgrade reflects the application of our "U.S. And Canadian Not-For-Profit Transportation Infrastructure Enterprises" (TIE) criteria (published March 12, 2018).
Securing the bonds is a $4.50 fee levied on enplaned passengers at Portland International Airport (PDX), which the port owns and operates.
"The ratings reflect our opinion of PDX's very strong enterprise risk profile and the strong financial risk profile associated with the stand-alone PFC pledge," said S&P Global Ratings credit analyst Joe Pezzimenti. In general, our enterprise risk profile assessment incorporates the favorable characteristics of an expanding metropolitan area and limited competition from other airports, and the resulting fundamental passenger demand for PDX. Our financial risk profile assessment considers the port's strong historical and projected maximum annual debt service (MADS) coverage of the PFC obligations, offset by a narrow fixed-rate revenue pledge. The financial risk profile assessment also reflects our expectation of declining PFC debt levels due to no planned additional parity debt and drawing down the PFC fund balance to fund projects included in the port's capital improvement program (CIP) for PDX.
PDX is on 3,200 acres on the southern edge of the Columbia River, 12 miles northeast of downtown Portland. The FAA considers PDX a large-hub airport, ranking 30th busiest airport in the U.S., based on 2017 enplaned passenger data from the FAA. Seattle-Tacoma International Airport is the closest major airport facility (160 miles to the north) and does not, in our opinion, provide a viable alternative. The only other commercial service airports in the state are smaller and at least 100 miles from Portland.
The stable outlook reflects our expectation that pro forma PFC MADS coverage will remain strong during the two-year outlook period from generally steady enplanement levels and no additional parity debt plans.
We could raise the rating in the next two years if pro forma PFC MADS coverage based on actual results exceeds 3x and we believe it will stay above this level.
Although unlikely, we could lower the rating if pro forma PFC MADS coverage erodes significantly due to a severe decline in enplanements or the port issuing significant parity debt.
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