Atlanta Airport Car Rental Bonds Downgraded

Hartsfield-Jackson International Airport bonds for its new rental car center have been downgraded, partly due to the recent downturn in rental car transactions.

The rating on College Park, Georgia’s approximately $221 million of outstanding series 2006A and 2006B revenue bonds issued to finance the construction of a consolidated rental car facility and automated people mover maintenance facility at the airport has been downgraded to BBB+ from A-. The rating outlook is revised to negative from stable. The BBB+ rating reflects factors such as the airport’s sizeable underlying origination and destination market represented by the Atlanta metropolitan area and strong historical demand for rental cars at the airport.

The rating downgrade by Fitch Ratings for the consolidated rental car facility and automated people mover bonds is based on an elevated risk profile with weaker-than- expected coverage levels and a forecast of rising customer facility charge rates given the project’s higher-than-anticipated construction costs and the recent downturn in rental car transactions. Earlier in 2009, the airport raised the customer facility charge rate to $4.50 per day, up from $4, to preserve customer facility charge revenues in the face of 10 percent declines in rental car transactions over the past year. The sole source of revenue pledged by Atlanta for the payments are receipts generated by a daily customer facility charge levied on all rental car contracts issued by rental car operators at the airport.

Issuance of new CFC secured debt will stress overall coverage levels and availability of surplus CFC revenues for certain APM costs, particularly if rental car transactions fail to recover from the current downturn. Airport forecasts indicate that rental car transactions could fall to 5.2 million annually in 2010, off by nearly 1 million or 16 percent from fiscal 2008 levels.

Rental car activity at the airport peaked in 2000 and 2006 at about 6.3 million total transaction days but has fallen to almost 5.4 total transaction days. Rental car activity in fiscal 2008 was essentially flat over the prior year at 6.18 million, but has fallen by nearly 10 percent through the first 10 months of fiscal 2009.

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