TEXT-S&P Report Says Aust, NZ Airports Outlook Remains Stable

(The following was released by the rating agency)

MELBOURNE (Standard & Poor's) Oct. 5, 2012-After witnessing strong growth in the recent past, rated Australian and New Zealand airports could be further tested in light of the continuing global economic uncertainty, particularly in China. Nonetheless, the outlook for the rated airports remains stable, Standard & Poor's Ratings Services said in a report published today titled, "Rated Australian And New Zealand Airports Are Well Placed To Face A China Slowdown".

"The ability of the Australian and New Zealand airports to maintain credit quality in the face of industry shocks has been underpinned by resilience in passenger demand, as well as the capacity and willingness of the airport's management to take necessary steps to protect their credit profile," Standard & Poor's credit analyst Philip Grundy said. "The strong business risk profiles of the rated airports, demonstrated history of relatively quick recovery from shocks, and our expectation of continued long-term growth in passenger demand underpin our stable outlook for the sector."

In our report, we have analyzed the ability of rated airports in the two countries to withstand pressures from three independent hypothetical scenarios: a hard economic landing in China, significant depreciation of the Australian dollar, and failure of a major airline. We believe the extent of the impact would vary for each airport. While an airport's revenue mix and financial risk profile would be critical in contending with the challenges, most rated airports have typically preserved their credit quality by rationalizing their capital projects, and maintaining prudent refinancing practices and adequate liquidity.