Rating Action: Moody's assigns A3 to Hillsborough County Aviation Authority - ConRAC Project's (FL) 2022 Series A bonds; outlook is stableGlobal Credit Research - 08 Feb 2022New York, February 08, 2022 -- Moody's Investors Service has assigned an A3 rating to Hillsborough County Aviation Authority, FL - ConRAC Project $366 million Tampa International Airport Customer Facility Charge Revenue Refunding Bonds, 2022 Series A (Taxable) and affirmed the A3 rating on the outstanding $383 million parity Customer Facility Charge bonds. The outlook is stable.RATINGS RATIONALEThe A3 rating reflects the considerable demand for rental cars at Tampa International Airport (Hillsborough County Aviation Authority, Aa3 stable) which is serving one of the fastest growing markets in the United States, healthy projected debt service coverage ratios, net of O&M expenses, above 1.5x after the airport meets full recovery in fiscal 2024 and no current plans for future debt issuance. The rating is also supported by strong credit protection features including an unfettered ability to raise the customer facility charge (CFC) rate and a rate covenant that requires 125% coverage with annual collections or 150% coverage with the use of rolling coverage. The ability to charge a deficiency payment to rental car companies, on a joint and several basis, in the event CFC collections fall short of debt service requirements provides protection in the event that disruptions are localized. Adequate liquidity in the form of rolling coverage, surplus, and repair and replacement (R&R) funds support the rating. The rating also considers that substantial competition from transportation network companies (TNCs) may rebound as consumers regain confidence in shared transportation following the pandemic.RATING OUTLOOKThe stable outlook reflects Moody's expectation that demand for air traffic and rental car demand will return to pre-pandemic and support strong DSCR and liquidity accumulation.FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS- Liquidity measured by cash to debt service above 4.0x- DSCR, net of O&M reimbursements, consistently above 1.5xFACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS- DSCR, net of O&M reimbursements, below 1.25x for a sustained period- Protracted O&D enplanement declinesLEGAL SECURITYThe bonds are secured by on-airport CFCs, off-airport TFCs, and payments from the rental car company concessionaires as deficiency payments to cover mandatory eligible costs of debt service, 40% of the annual O&M costs of the APM, amounts necessary for the R&R fund, and any other deposits required by the CFC trust indenture. The CFC bonds will also benefit from a debt service reserve funded at the maximum amount of annual debt service (approximately $26.6 million) and a rolling coverage account funded at 0.25x annual debt service. A rate covenant of 1.25x will be in place ensuring that CFC collections are sufficient to cover debt service, with the ability to use rolling coverage from the surplus account for an additional 25% of debt service to a total 1.50 times. If CFC collections fall short of mandatory eligible costs, the HCAA has the ability to charge deficiency payments to the rental car companies pro-rata and on a joint and several basis in order to fund the difference between collection and mandatory eligible costs. New amendments to the trust indenture allows the authority to use surplus CFC funds to pay operating costs of the ConRAC and redeposit surplus funds into the revenue account. The later is a benefit in situations like the pandemic, but weakens the effect of the rate covenant.USE OF PROCEEDSThe 2022A Taxable Revenue Refunding CFC bonds will refund outstanding 2015 A & B series CFC bonds to achieve debt service savings and pay costs of issuance.PROFILEHillsborough County Aviation Authority (HCAA) is a public body corporate and is an independent special district. The authority has exclusive jurisdiction, control, supervision and management over all publicly owned airports in Hillsborough County, Florida. The airport system consists of Tampa International Airport (TPA), Peter O. Knight Airport, Plant City Airport and Tampa Executive Airport. The latter three are general aviation airports which serve as reliever airports. TPA is a FAA large hub airport consisting of a single main terminal with four airside concourses that total 58 aircraft gates. It has three runways, including two parallel runways and one crosswind runway. As the authority owns and operates Tampa International Airport, it also oversees the consolidated rental car (ConRAC) facility that is adjacent to the airport. The ConRAC facility was opened in February 2018 and houses nine rental car companies governed by a lease and concession agreement. The term of the agreement began on September 1, 2015 and is to terminate thirty years after the date of the issuance of the 2015 CFC bonds. HCAA has retained the option to renegotiate terms every ten years.METHODOLOGYThe principal methodology used in these ratings was Publicly Managed Airports and Related Issuers published in March 2019 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1140469. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.REGULATORY DISCLOSURESFor further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. 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For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.These ratings are solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1288235.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the EU and is endorsed by Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the UK and is endorsed by Moody's Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating. Earl Heffintrayer Lead Analyst Project Finance Moody's Investors Service, Inc. 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