DBRS Comments on Greater Toronto Airports Authority’s CP Program Limit Increase to $1.4 Billion

DBRS Limited (DBRS) notes that Greater Toronto Airports Authority’s Commercial Paper (CP) program limit has been increased to $1.4 billion from $1.0 billion, effective October 5, 2018 (GTAA; Issuer Rating of A (high) and CP rating of R-1 (low) with Stable trends by DBRS). The increased CP program remains fully backed by GTAA’s $1.4 billion revolving operating credit facility. The upsizing of the CP program does not result in a change to the total availability under GTAA’s committed financing lines. DBRS is of the opinion that the increase in size of the CP program limit has no effect on GTAA’s ratings.

OPERATING UPDATE
Toronto Pearson International Airport’s global hub strategy continued to engender additional frequencies on existing routes, upgauge average aircraft size and add new routes by existing air carriers in H1 2018. For the six months ended June 30, 2018, GTAA’s total revenues increased by 5.8% compared with H1 2017, roughly in line with total passenger volume growth of 6.0%, with 23.7 million passengers year to date. Operating expenses (excluding depreciation) increased by $39.0 million, or 11.8%. Interest expense decreased by $16.2 million, or 9.8%, as a result of the lower financing cost available under the CP program. However, these savings were offset by a one-time early retirement charge of $28.7 million of the Series 2009-1 Medium-Term Notes. EBITDA, as calculated by GTAA, decreased 0.1% during H1 2018 compared with H1 2017.

In addition, GTAA’s debt per enplaned passenger as at June 30, 2018, stands at $242, which is supportive of its ratings.

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

The principal methodologies are Rating Canadian Airport Authorities and DBRS Criteria: Commercial Paper Liquidity Support for Non-Bank Issuers, which can be found on dbrs.com under Methodologies.

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