Guam airport outlook dropped to negative by Moody's

Moody's Ratings revised the outlook to negative from stable on revenue bonds issued for Guam's commercial airport and affirmed the Baa2 rating, citing weaker-than-expected enplanement levels.

The action affects $190 million in debt from the A.B. Won Pat International Airport Authority.

The negative outlook "reflects our expectation that enplanement levels will continue to trend well below even the low end of our expected projections, which demonstrates a weaker position and will challenge the ability for the airport to generate sufficient revenue to maintain satisfactory financial metrics for the current rating level," Moody's said. "This includes liquidity, which has markedly declined in recent years."

Moody's noted the airport's strong position as the sole commercial airport serving the Pacific island territory, the benefits of its hybrid residual airline lease and operating agreements and the support of the local government, which has provided direct and indirect financial aid in recent years. The airport has satisfactory debt service coverage, though this will likely decline in fiscal 2026 as debt service increases, the rating agency said.

The airport authority's debt rating is constrained by the service territory's size and enplanement levels as well as dependence on tourism from South Korea and Japan, Moody's said. Guam in recent years, "lost some of its appeal to Japanese and South Korean visitors." The airport's exposure to environmental risks like typhoons is also a credit negative.

John Quinata, executive manager of the Guam International Airport Authority, told The Bond Buyer, "The revision of the outlook from stable to negative reflects short-term external recovery challenges that are expected to improve gradually."

But despite these issues, the authority "remains firmly committed to meeting its debt obligations, sustaining required debt service coverage ratios, enhancing operational efficiencies and maintaining flexibility in its operations," he said.

GIAA has "worked diligently to contain operations and maintenance expenses, refinance and restructure debt for long-term savings and advance efforts to diversify revenue through non-aeronautical sources," Quinata added.

Fitch Ratings raised the outlook on BBB-rated Guam Waterworks Authority. to stable from negative in June.