KBRA assigns a long-term rating of A+, with a Stable Outlook to Airport Revenue Bonds, Series 2024A (AMT) and Series 2024B (Non-AMT) to be issued by the Reno-Tahoe Airport Authority, NV (“the Authority”). The Authority owns, operates and manages the Reno-Tahoe International Airport (RNO or “the Airport”) and a small general aviation airport, both of which comprise the Airport System. Airport Revenue Bonds are payable solely from and secured by a pledge of Net Revenues of the Airport System, along with certain funds and accounts, and other amounts payable under the Master Indenture.
Key Credit Considerations
Credit Positives
- Enplanement growth prior to and in the wake of the pandemic, buttressed by a healthy air trade area and limited competition.
- Sound financial performance, characterized by increasing non-airline revenue generation and healthy liquidity.
- Historically limited use of debt as a source of capital funding.
Credit Challenges
- Expected, significant increase in leverage as borrowing to fund MoreRNO occurs over multiple fiscal years.
- Execution and completion risks associated with implementing a multi-year, transformational CIP.
- RNO’s still small enplanement base, coupled with moderate airline concentration and limited geographic reach.
The Stable Outlook reflects KBRA’s expectation that Authority’s financial performance and liquidity levels will remain at or near current levels, with MoreRNO projects prudently implemented on-time and on-budget. DSC projections are, in KBRA’s view, attainable, with continued growth in non-airline revenues helping to temper expected increase in airline costs.
Rating Sensitivities
For Upgrade
- Strengthening operating margins, coupled with debt service coverage that consistently exceeds required minimums.
- Maintenance of competitive airline costs in-line with projections.
For Downgrade
- Issuance of additional debt without a commensurate rise in resources available for repayment.
- Failure to implement the MoreRNO Program on-time and within budget, resulting in financial stress.
- While not expected, a prolonged period of depressed passenger traffic resulting from an exogenous shock or structural shift in the airline industry.
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Methodologies