S&P Global Ratings has raised its long-term rating for the Sacramento County Department of Airports’ (SCDA) outstanding bonds. The primary reasons for the upgrade reflect the demonstrated financial resilience and rate-setting flexibility during a period of materially depressed activity, along with the airport’s strong passenger recovery trends exceeding S&P’s expectations and S&P’s Global Ratings’ updated baseline activity recovery estimates.
“We are pleased with S&P’s decision to upgrade the ratings for our airport revenue bonds,” said Cindy Nichol, Director of Airports for Sacramento County. “This is an important vote of confidence in our efforts to manage our financial obligations in a responsible and sustainable way. This rating action also speaks volumes for the strength of our community as we continue to recover from the economic dislocations associated with the COVID-19 pandemic.”
In addition to the rating upgrade, SCDA maintained a stable credit outlook.
Additional points from S&P’s decision release included:
- S&P Global Ratings show confidence that traffic is sustainable and supportive of an improved market position assessment and very strong enterprise risk profile, and that financial metrics will be maintained consistent with a strong financial risk profile.
- SMF entered the pandemic operationally and financially strong, with enplanements at their highest level at 6.3 million enplaned passengers for fiscal year ended June 30, 2019, historically strong debt service coverage (DSC; S&P Global)
- The combination of vaccine progress, easing mobility restrictions, strong economic growth and pent-up domestic leisure travel demand has contributed to Sacramento International Airport's recent strong recovery in air travel demand.
- While the passenger recovery could stall or be hampered by ongoing threats from coronavirus variants, weakening consumer confidence and restrictions that inhibit travel, S&P believes the passenger recovery and stabilization to levels that facilitate financial planning and rate-setting by airport management will allow SMF to achieve and maintain balanced financial operations from recurring operating revenue and a business-as-usual rate-making environment supporting the higher rating.
