Dublin Airport - Ratings Agency

S and P upgraded the Dublin Airport Authority from BBB+ to A-
The Irish government would bail out the Dublin Airport Authority if it needed to, according to ratings agency Standard and Poor’s (S&P), in its recent justification for upgrading the authority’s credit rating.

S&P upgraded the Dublin Airport Authority’s credit rating from BBB+ to A-, based on its assessment that the company’s links with the state were now ‘strong’ rather than ‘limited’.

The ratings agency said that because of the strong links between the airport operator DAA and the government, they were upgrading their view of the likelihood of extraordinary support for DAA by the government to moderately high from moderate.

The note from S&P said that, “Although there has been no track record of providing timely extraordinary credit support to date, as it has never been needed, we have revised the likelihood of support upward because we believe that if DAA encountered financial difficulties and required such extraordinary support, the government would be willing to provide it.”

It continued: “We also understand it is government policy to monitor the financial sustainability of DAA and ensure that DAA can meet its financial obligations on time.”

In August, the government published an aviation policy for the country in which it said it was no longer considering privatising the authority because of its strategic importance to the Irish economy.

The agency said in its report that, “We are therefore raising our long-term corporate credit rating on DAA to ‘A-‘ from ‘BBB+’.”

It said, “The stable outlook reflects our view that DAA’s credit measures will remain broadly stable over the next couple of years, and that Dublin Airport will continue to be owned by the government.”

The company’s short-term corporate credit rating remains at ‘A-2’.

In addition, S&P raised its issue rating on the senior unsecured notes issued by DAA’s financing subsidiary, DAA Finance, to ‘A-‘ from BBB+’.

S&P also assigned an ‘A-‘ issue rating to a new €300 million, five-year revolving credit facility due in November 2020.

The independence or privatisation of Cork Airport could still be considered at the next review in 2019, the note said, but pointed out that Dublin Airport is of strategic importance and that “its future is critically bound up with the Irish economy”.

In the first nine months of 2015, Dublin Airport’s traffic numbers were 15.3 per cent higher than the same period in 2014. Dublin airport generates about 80 per cent of the DAA’s earnings.

According to S&P, improving macroeconomic conditions in Ireland and the launch of 25 new routes so far this year have bolstered the passenger volumes.

The report said, “We forecast that these two effects together will lead to an increase of about 12 per cent in reported EBITDA for 2015.”

Sunday Business Post

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