Fitch Ratings affirmed the 'BB+' rating of Sociedad Concesionaria Operadora Aeroportuaria Internacional, S.A.'s (OPAIN) USD415 million senior secured notes (the notes) and revised the Rating Outlook to Stable from Negative.
OPAIN is the concessionaire of El Dorado International Airport in Bogota, Colombia.
The rated notes coexist on a pari-passu basis with two Colombian peso denominated loans, for amounts of COP100 billion and COP315 billion, which mature in October 2025 and December 2028, respectively.
RATING RATIONALE
The Outlook revision to Stable from Negative reflects Fitch's alleviated concerns with respect to the pace of traffic recovery, given 2022 traffic already surpassed pre-pandemic levels. It also reflects the concession's ability to pay in June 2022 the remaining deferred concession fees from 2020. Fitch has adjusted its projections to reflect actual volume performance in 2022, but also updated macroeconomic assumptions and a higher operational expenditures (Opex) budget as released by the sponsor, which resulted in slightly deteriorated average debt service coverage ratio (DSCR) compared to the prior review. Nevertheless, projected coverages remain commensurate with the assigned rating.
The rating reflects El Dorado airport as a strategic asset for Colombia, being the main gateway to the country and the third-largest airport in Latin America in terms of traffic volume. The airport has a robust traffic base, comprising mainly origin and destination (O&D) passengers and has a demonstrated history of strong traffic performance with relatively low volatility. The rating also reflects a dual-till rate-setting framework, with an adjustment mechanism for regulated revenues that tracks local and U.S. consumer prices indices. The debt is fixed-interest rate and fully-amortizing with a six-month debt service reserve account (DSRA) and standard covenant package and structural features.
Under Fitch's rating case, minimum and average DSCR are 1.1x (2025) and 1.2x (2023-2026), respectively. Credit metrics are consistent with the assigned rating, according to applicable criteria.
KEY RATING DRIVERS
Essential Infrastructure Asset in Colombia [Revenue Risk: Volume - Stronger]: Located in Bogota's metropolitan area, El Dorado airport is a critical facility that serves as the country's largest commercial airport and its international gateway. The airport benefits from a large O&D base, with traffic volume showing strong positive growth for the last decade and no meaningful competition from other airports or forms of transportation. Avianca Holdings S.A. constitutes roughly 40% of total traffic, however counterparty risk is relatively mitigated by the airport's strategic and competitive position within the country and the region.
Dual-Till Rate Setting [Revenue Risk: Price - Midrange]: The concession contract establishes that regulated revenues, which comprise the majority of OPAIN's revenues, are adjusted yearly to track 95% of Colombian or the U.S. CPI, depending on the currency denomination of the tariff. Extraordinary increases in tariffs may occur in case either CPI varies by more than 10%, since the last tariff update. Commercial revenues are not subject to a tariff adjustment mechanism and are negotiated in private agreements with each tenant.
Well-Maintained Airport [Infrastructure Development/Renewal - Stronger]: El Dorado is a modern airport in good condition, with well-defined maintenance needs, as the concession expires in six years. The airport ended the construction phase in January 2019, and no major works are pending, aside from potential complementary and voluntary works. According to the independent engineer, capex related to refitting the airport (replacement capex, or repex) is adequate to cope with the expected expenses associated to the concession's expiration.
Midrange Structural Features [Debt Structure - Midrange]: Debt structure comprises the U.S. dollar-denominated senior secured notes issuance and two non-rated Colombian peso-denominated loans. The notes are fully amortizing and with a 4.09% fixed-interest rate. The structure benefits from six-month DSRAs with one offshore account for the rated debt and one onshore account for the non-rated facilities. The offshore account shall increase over the debt term to 12-months debt service if the historical DSCR ended on or after June 30, 2024 is less than 1.20x.
Other structure features include adequate debt incurrence and a dividend distribution test at 1.20x, which provides adequate mitigation for the absence of a cash waterfall. Exposure to foreign exchange risk is seen as limited as approximately 75% of revenues are U.S. dollar-denominated, providing a natural hedge against Colombian peso/U.S. dollar exchange rate variations.
Financial Profile
DSCR is viewed as the relevant metric for the transaction, given its short maturity and fully-amortizing nature. Minimum and average DSCRs under Fitch's rating case are 1.1x (2025) and 1.2x (2023-2026), respectively, consistent with the assigned rating, according to applicable criteria.
PEER GROUP
El Dorado's closest peer is Mexico City's airport (Grupo Aeroportuario de la Ciudad de Mexico, GACM), rated 'BBB-' with a Stable Outlook. GACM and El Dorado are international gateways for their countries with a sizable O&D market. However, GACM has aged facilities and significant capacity constraints, while El Dorado is a modern and well-maintained airport with defined maintenance needs.
GACM's peak leverage of 9.7x in 2025 is strong for the 'BBB-' rating, according to Fitch's applicable criteria. Nonetheless, the standalone credit profile (SCP) is limited given the uncertainty with respect to the impact of a potential traffic migration to the new Felipe Angeles International Airport. El Dorado shows an average DSCR of 1.2x, consistent with the current rating.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative rating action/downgrade:
Annual traffic growth consistently below 3.0%;
Increases in operational expenses that result in observed DSCR below 1.15x;
Material deterioration of liquidity that jeopardize the project's ability to pay debt service.
Factors that could, individually or collectively, lead to positive rating action/upgrade:
A positive rating action on Colombia's sovereign rating, as long as the airport's fundamentals support that view.
Best/Worst Case Rating Scenario
International scale credit ratings of Sovereigns, Public Finance and Infrastructure issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of three notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. For more information about the methodology used to determine sector-specific best- and worst-case scenario credit ratings, visit https://www.fitchratings.com/site/re/10111579.
CREDIT UPDATE
In 2022, total passengers reached 35.5 million, which represented 101% of the levels observed in 2019, while Fitch's base and rating case assumed 100% and 94% respectively. Domestic traffic showed a greater resilience than international traffic, with an average recovery of 104% versus 95% expected by Fitch in its base case. According to the concessionaire, traffic recovery was benefited in 2022 as a result of the exclusion of VAT charges in price tickets, the opening of new international routes and entrance of airlines, as well as an increase in Avianca's capacity factor.
Total revenues were COP1,503 billion (USD353 million), representing 131% of the levels registered in 2019, and exceeded Fitch's rating case projections by 18%, mainly driven by a higher-than-expected recovery in international traffic.
Operating expenditures in 2022, excluding the concession fee, were COP289 billion, in line with Fitch's expectation of COP285 billion, while capex reached COP13 billion, above our expectation of COP2 billion. In June 2022, Opain completed the payment of the concession fee corresponding to 1H20 that had been deferred to 2022.
Debt service in 2022 was COP302 billion, higher than projected due to a higher IBR rate during the year, which increased the interest payment of Opain's loan. Also, when considering the actual average COP/USD exchange rate in 2022, debt service of the USD notes, express in COP, were higher than projected.
As a result of higher revenues and lower expenses, DSCR in 2022 (including deferred concession fees) was 1.6x, above Fitch's rating case projection of 1.0x.
FINANCIAL ANALYSIS
Fitch's base case reflects actual performance in 2022 and assumes a 4.5% compounded annual growth rate (CAGR) from 2023 to 2026. For international passengers, the agency assumed a 100% recovery in in 2023 compared with 2019 plus a 5.4% growth; then, a 5.1% CAGR from 2024 to 2026. The budgets for administrative and operating expenses were stressed by 3%. U.S. CPI reflects Fitch's forecast of 3.7% in 2023, 2.7% in 2024 and 2.0% from 2025 onwards, while Colombia's CPI forecast is 6.0% in 2023, 3.0% in 2024 and 2.5% from 2023 onward. Under this scenario, minimum DSCR is 1.2x in 2025 and average (2023-2026) is 1.3x.
Fitch's rating case assumes a 3.3% CAGR for domestic traffic from 2023 to 2026. For international passengers, the agency assumed a recovery of 100% in 2023 compared to 2019; then, a 3.8% CAGR from 2024 to 2026. The budgets of administrative, operating and capital expenses were stressed by 5%. U.S. CPI and Colombia's CPI were assumed the same as the base case. Under this scenario, minimum DSCR is 1.1x in 2025 and average (2023-2026) is 1.2x.
SECURITY
The ANI granted OPAIN a 20-year concession to operate and expand El Dorado International Airport on September 2006. Located in Bogota, the capital city of Colombia, El Dorado is the third-busiest airport in Latin America in terms of traffic and the most active in the region in terms of cargo. It has an estimated catchment area of 10.7 million people and serves all major Colombian cities at 41 domestic routes and major international destinations at 50 international routes across the Americas and Europe.
The concession agreement excludes the runways and air traffic control, taxiways, administrative buildings, and designated military, police and government facilities. The airport airfield consists of two parallel independent runways. In January 2019, OPAIN ended the construction phase. All the mandatory works have been carried out including the construction of a new passenger terminal, new cargo facilities, new office buildings and new apron.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
ESG Considerations
Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg
AVIANCA HOLDINGS SA 
