Moody’s rates Vancouver Fuel notes A1

Moody’s Investors Service said it assigned an A1 rating to the Vancouver Airport Fuel Facilities Corp.’s proposed C$400 million offering of senior secured amortizing notes.

“VAFFC’s A1 rating reflects the essentiality of the service it provides, on an exclusive basis, to a consortium of airlines at Canada’s second largest airport, the Vancouver International Airport (“Airport”). This role will ensure that VAFFC’s services will be required for at least the term of the debt. The rating also reflects VAFFC’s right to recover its costs in a timely manner without any revenue variability. Importantly, given VAFFC’s exposure to historically generally weak airlines, it benefits from various levels of contractual protections that insulate it from airline credit risk,” Moody’s said.

The offering means a significant boost in debt for the company compared with 2018’s end of year balance, but Moody’s said it views the offering as credit neutral since the proceeds will be used for projects that have support from a group of airlines. The contracted airlines approved the offering and the company can recover the debt from the airlines, the agency said.

The outlook is stable.

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