Dépêches

Fitch Affirms Greenville County, South Carolina's Airport Revs 'BBB-': Outlook Positive

Dépèche transmise le 27 mars 2009 par Business Wire

NEW YORK--(BUSINESS WIRE)--In the course of routine surveillance, Fitch Ratings affirms Greenville County, South Carolina's approximately $10.8 million airport revenue bonds. The Rating Outlook is Positive.

The 'BBB-' rating reflects the Donaldson Industrial Air Park's (DIAP) satisfactory financial performance, its competitive niche in aircraft industrial development, and the homogenous revenue base which is dependent on industrial lease revenues and concentrated in a few major lessees. The main tenant, Lockheed Martin (LMT; Fitch Issuer Default Rating of 'A-'), comprises an estimated 76% of total monthly lease revenues, or 73% of total revenues. The revenue concentration and lease renewal risks are partially mitigated by LMT's estimated $40 million in infrastructure investments and increased defense-related activity over the past few years.

Consistent with the Positive Rating Outlook, upward movement in the rating over the next one to three years would reflect the DIAP's ability to implement its plans for increased operations and a more diversified rental payment base while maintaining satisfactory debt service coverage levels.

The bonds are secured by net revenues of the air park. Pledged revenues are dominated by lease payments and include fuel flowage fees and 50% of any income or earning derived by the Donaldson Industrial Air Park Commission (the commission). The definition of pledged revenues is broad and includes landing fees which were implemented a few years ago. Standard bondholder protective covenants include a 1.25 times (x) coverage test for additional indebtedness. Fiscal 2008 net revenues cover maximum annual debt service (MADS) 1.30 times (x). The proprietary fund's unreserved balance totaled $5.9 million, equal to a robust 194% of spending. Beginning in fiscal 2009, MADS coverage is projected to increase to 1.34x due to the implementation of annual inflation adjustments for all new and renewed leases.

The lease payments, accounting for 96% of total revenues for 2008 revenues, are derived from numerous tenants. Though lease payment agreements are subject to various expirations and termination provisions, retention has been good to date and management anticipates maintaining positive relationships with all of the current tenants. LMT's current lease is for 30 years with six five-year renewals. The current renewal period expires in 4 years and 5 months, and the agreement requires LMT to give DIAP one years' notice to cancel the lease.

Local economic factors, including low taxes and reasonable labor costs, continue to make the air park attractive. Fitch rates Greenville County's general obligation bonds 'AAA'.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.