DBRS Rates GTAA’s $600 Million Medium-Term Note Issue at “A”

DBRS has today assigned a rating of “A” with a Stable trend to the $600 million Medium-Term Note (the Notes) issue of the Greater Toronto Airports Authority (GTAA or the Authority). Maturing in February 2041, the Notes are senior obligations of GTAA and rank pari passu with all other senior obligations of the Authority. The rating is consistent with those previously assigned by DBRS on the Authority’s outstanding bonds. Net debt proceeds will be used to redeem the $325 million MTN Series 2008-2 recently called by the Authority, to fund some accelerated capital initiatives planned for 2011 and for general corporate purposes.

Year-end results are not yet available, but the Authority is expected to have had a sound performance in 2010. Overall passenger traffic and aircraft movements advanced by 4.9% and 2.5% year-over-year, respectively, which helped offset reductions of 10% in landing fees and 10.2% in terminal charges implemented on January 1, 2010. The international and transborder segments accounted for most of the growth while domestic traffic was flat. Based on its fall budget, the Authority foresees growth of 5.2% this year. Fees for cargo aircraft were reduced by 4.3% at the beginning of the year while aeronautical fees were held steady after two consecutive years of material reductions, which should allow for moderate revenue growth and improved metrics.

DBRS notes that the strike of certain baggage handlers underway at Toronto Pearson International Airport since Tuesday, February 15 is not expected to disrupt operations or materially affect traffic as it is limited to a few airlines operating from Terminal 3 and supervisors have stepped in to maintain services.

Note:
All figures are in Canadian dollars unless otherwise noted.

The applicable methodology is Rating Canadian Airport Authorities, which can be found on our website under Methodologies.