KBRA Assigns an A Rating and Stable Outlook to St. Louis Lambert International Airport Revenue Bonds

NEW YORK--(BUSINESS WIRE)--KBRA assigns a long-term rating of A with a Stable Outlook to the City of St. Louis, Missouri (the City) Airport Revenue Bonds Series 2026A (Federally Taxable), Series 2026B (AMT), and Series 2026C (Non-AMT) issued for St. Louis Lambert International Airport (the Airport). Concurrently, KBRA assigns an A rating to the City's outstanding Airport Revenue Bonds.

Proceeds of the Series 2026 Bonds to 1) finance elements of the Airport’s fiscal year (FY) 2027 – 2032 capital improvement plan (CIP) including a runway resurfacing project and planning for the future modernization of the Airport referred to as the Consolidated Terminal Program (CTP); 2) refund all or a portion of the Airport’s outstanding Junior Lien Bank Notes; 3) fund the required deposit to the debt service reserve fund; 4) pay capitalized interest; and 5) costs of issuance.

Airport Revenue Bonds (GARBs) are payable from the Net Revenues generated by the operation of the Airport.

Key Credit Considerations

Credit Positives

• The service area’s broad and diverse economic base that generates consistent demand for air service bolstered by recent economic development activity including a Boeing defense aircraft assembly facility.
• An essentially residual-based operating agreement that provides a base for sound financial operations and coverage of annual debt service.
• Current moderate debt and cost structure which provides some capacity for the CTP, although details on its ultimate scope and financing strategy are unknown.

Credit Challenges

• Local economic growth lags national trends limiting expectations for future gains in passenger volume.
• Senior management transition at a time when the Airport is planning a significant capital program.
• Moderately high pro-forma levels associated with the current CIP that are likely to trend higher with the planned terminal redevelopment.

Rating Sensitivities

For Upgrade

• Sustained growth in enplanement growth leading to increased revenue capacity and moderating leverage.
• Successful negotiation of a new use and lease agreement that materially strengthens the Airport’s financial and capital-planning framework.
• Confirmation that the chosen CTP implementation and financing strategy results in a pro-forma cost and leverage profile which places the Airport at the lower end of peer medium hub airports undertaking capital programs of similar scope and complexity.

For Downgrade

• A material reduction in service by Southwest Airlines or a prolonged economic contraction, resulting in a sustained decline in passenger activity and related revenues.
• Confirmation that the chosen CTP implementation and financing strategy results in a pro-forma cost and leverage profile which places the Airport meaningfully above peer medium hub airports undertaking capital programs of similar scope and complexity.

To access ratings and relevant documents, click here.

Methodology

• Public Finance: U.S. General Airport Revenue Bond Rating Methodology

Disclosures

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA), one of the major credit rating agencies (CRA), is a full-service CRA registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a Designated Rating Organization (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan’s Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.

Doc ID: 1016984