Dépêches

Fitch Rates Chicago O'Hare Airport, IL's 3rd-Lien Revs 'A-'; Outlook Stable

Dépèche transmise le 26 septembre 2011 par Business Wire

NEW YORK--(BUSINESS WIRE)--Fitch Ratings assigns a long-term underlying rating of 'A-' to bank bonds corresponding to $100 million of third-lien variable-rate demand obligations (VRDOs) series 2005D issued by the city of Chicago (the city) on behalf of O'Hare International Airport (the airport).

In addition, Fitch affirms the following airport debt ratings:

--$6.1 billion parity third-lien airport revenue debt at 'A-';

--$73 million first-lien airport revenue bonds at 'AA+';

--$369 million second-lien general airport revenue bonds (GARBs) at 'AA';

--$812.7 million passenger facility charge (PFC) bonds at 'A'.

The Rating Outlook for all bonds is Stable.

KEY RATING DRIVERS

--The airport's substantial traffic base as well as its central role in the national air transportation system, including two major hubs respectively operated by American Airlines (American) and United Airlines (United);

--A broad and diverse economic base that creates strong local demand for air service to complement the airlines' hub operations;

--A sizable aggregate airport debt burden of approximately $7.4 billion which is expected to be increased above current levels in order to fund the full completion phase of the O'Hare Modernization Plan (OMP). Fitch estimates that net debt to cash flow available for debt service (CFADS) is currently about 11 times (x) for the GARBs, and will increase to about 15x once the OMP debt is fully in place;

--Continued progress on a complex capital program much of which will address airfield capacity improvements, although the airport will likely see a materially higher projected airline cost position in conjunction with the servicing of debt for the capital program;

--An adequate financial profile that is reflective of a residual rate-setting methodology;

--The airport's continued reliance on its two largest carriers, United and American, whose operating decisions and strategic support can significantly influence the financial condition of the airport.

WHAT MAY TRIGGER A RATING ACTION

--Changes in the airport's current traffic base, particularly hub operations and ongoing commitment from its leading carriers;

--Material revisions to size and scope of the capital program;

--Inability to manage the overall airport cost profile along with adequate coverage metrics.

SECURITY

The third-lien general airport revenue bonds are the working lien of the O'Hare airport GARB credit, secured by a pledge of the net revenues generated at the airport on a subordinate basis to the airport's outstanding first- and second-lien GARBs. The first- and second-lien GARBs are closed to additional new money issuance. The PFC bonds are limited obligation, payable solely from PFC payments received by the airport. General revenues and funds of the airport are not pledged to the payment of the PFC bonds.

CREDIT UPDATE:

A mandatory tender and reoffering of the series 2005D bonds will occur on Sept. 28, 2011 whereby the irrevocable direct-pay letter of credit (LOC) with Dexia Credit Local will be replaced with a letter of credit with Barclays Bank PLC. The new LOC will extend for a three-year term until Aug. 15 2014.

For more information on the airport's underlying credit summary, see Fitch's April 11, 2011 press release 'Fitch Rates Chicago O'Hare Airport (IL) 3r-Lien Revs to 'A-'; Upgrades PFC Revs to 'A'; Otlk Stable, available at 'www.fitchratings.com'.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Rating Criteria for Infrastructure and Project Finance' (Aug. 16, 2011);

--'Rating Criteria for Airports' (Nov. 29, 2010).

Applicable Criteria and Related Research:

Rating Criteria for Infrastructure and Project Finance

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=648832

Rating Criteria for Airports

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=578745

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