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Grupo Aeroportuario del Centro Norte (OMA) -- Moody´s assigns Baa1/Aaa.mx issuer and debt ratings to Grupo Aeroportuario del Centro Norte; negative outlook

·17 min read

Rating Action: Moody´s assigns Baa1/Aaa.mx issuer and debt ratings to Grupo Aeroportuario del Centro Norte; negative outlookGlobal Credit Research - 10 Mar 2021Mexico, March 10, 2021 -- Moody´s de México, ("Moody´s") assigned issuer ratings of Baa1 (global scale) and Aaa.mx (Mexico national scale) to Grupo Aeroportuario del Centro Norte, S.A.B. DE C.V. (OMA). At the same time, Moody's assigned Baa1/Aaa.mx debt ratings to OMA's outstanding senior unsecured fixed rate MXN1.5 billion certificados bursátiles (OMA13) due on 14 March 2023 and MXN3 billion certificados bursátiles (OMA14) due on 7 June 2021.Moody's also assigned Baa1/Aaa.mx debt ratings to the proposed senior unsecured variable rate certificados bursátiles due 2026 (OMA 21V) and senior unsecured fixed rate certificados bursátiles due 2028 (OMA 21-2). The proposed certificados bursátiles will be the first and second draw down, respectively, under OMA's MXN15 billion certificados bursátiles (local long-term revolving) program with a five-year tenor. Together OMA 21V and OMA 21-2 issuances may not exceed MXN 3.5 billion.This is the first time Moody's assign ratings to OMA. The outlook for all ratings is negative.Assignments:Grupo Aeroportuario del Centro Norte, S.A.B. DE C.V. (OMA)....Issuer Rating, Assigned Baa1/Aaa.mx....Senior Unsecured Regular Bond/Debenture, Assigned Baa1/Aaa.mx: (OMA13)....Senior Unsecured Regular Bond/Debenture, Assigned Baa1/Aaa.mx: (OMA14)....Senior Unsecured Regular Bond/Debenture, Assigned Baa1/Aaa.mx: (OMA21V)....Senior Unsecured Regular Bond/Debenture, Assigned Baa1/Aaa.mx: (OMA21-2) Negative outlook assigned. RATINGS RATIONALE The Baa1/Aaa.mx assigned ratings reflect Grupo Aeroportuario del Centro Norte, S.A.B.'s solid market position in the country, serving an economically important metropolitan area with relatively limited competition. The ratings reflect OMA's strong financial position driven by high operating margins (57% in 2019 and 39.3% for Last Twelve Months 09/20) and key credit metrics that are projected to remain relatively strong for the next two years despite significant demand imbalance caused by the coronavirus pandemic. Cash Interest Coverage and Funds From operations to Debt for 2021 are expected to remain at 3.6x and 18% respectively, improving in 2022 to 8.5x and 50% in Moody's base case, which considers traffic will remain below 2019 levels until at least 2023. Supporting these projections is Moody's forecast for a 5.5% GDP growth for Mexico in 2021. OMA's traffic profile consist predominantly of domestic passengers (representing more than 85% total), hence it should benefit from the anticipated economic rebound.The ratings also consider OMA's strong liquidity position, holding roughly MXN 2.9 billion in cash as of December 2020, or 64% of its 2021 estimated total expenditures. OMA's outstanding MXN 3 billion certificados bursátiles are due in June 2021. However, Moody's expects OMA to issue MXN 3.5 billion certificados bursátiles during 2021 in order to refinance the due amount and for financing part of its ambitious capital expenditures plan.Airports can be at risk of social factors such as labor agreements and noise issues with communities. In addition, pandemics, such as the COVID-19 outbreak, can disrupt global airport passenger traffic volume reducing passenger numbers and causing flight cancellations that hinder commercial revenue and airport charges. The airport sector faces governance risk through compliance with regulations and ground lease or concession terms and conditions. Covid-19 will have a major impact on Latin American airports in 2020, which is reflected in the ratings negative outlook. Alternatively, we do not see any material differentiation for the issuer from the governance considerations for the sector overall.The negative outlook reflects the uncertainties around the pace of traffic rebound and the implementation of travel restrictions over the next 12 to 18 months, leading to potential higher than anticipated liquidity risks or delayed recovery prospects.FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGSThe negative outlook on the rating could be stabilized if, following a lifting of global air travel restrictions or a more accelerated return to normal traffic performance, such that total traffic volumes approach the 2019 historical levels. A stable outlook would also require OMA's financial profile and key credit metrics to improve consistently to levels commensurate with the current rating, while the company maintains its adequate liquidity profile.Downward pressure on OMA´s rating could develop if (1) the company´s FFO/debt ratio were to decline to 20% on a sustained basis; (2) its liquidity position deteriorates; (3) it appeared likely that the coronavirus outbreak had a more sustained detrimental impact on traffic levels, either because of travel restrictions or potential airline failures; or (4) a further deterioration in Mexico's sovereign creditworthiness.PROFILEOMA operates two out of the top 10 airports in the country and contributes with 13.8% (September 2020) of the total air passengers in Mexico. OMA's traffic is mostly origin and destination travelers (more than 98%), and on average for the 2015-2019 period, 12.6% were international passengers. The airport in the large metropolitan city of Monterrey, along with the tourism destination airports of Acapulco and Mazatlán, and the airports located in the municipality of Culiacan and the state of Chihuahua (total of 6 airports), contribute with more than 70% of OMA's revenues.The principal methodology used in these ratings was Privately Managed Airports and Related Issuers published in September 2017 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1092224. Alternatively, please see the Rating Methodologies page on www.moodys.com.mx for a copy of this methodology.The period of time covered in the financial information used to determine Grupo Aeroportuario del Centro Norte, S.A.B. DE C.V. (OMA)'s rating is between 1/1/2018 and 31/12/2020 (source: Grupo Aeroportuario del Centro Norte, S.A.'s Financial Statements: 2018-2020).Moody's National Scale Credit Ratings (NSRs) are intended as relative measures of creditworthiness among debt issues and issuers within a country, enabling market participants to better differentiate relative risks. NSRs differ from Moody's global scale credit ratings in that they are not globally comparable with the full universe of Moody's rated entities, but only with NSRs for other rated debt issues and issuers within the same country. NSRs are designated by a ".nn" country modifier signifying the relevant country, as in ".za" for South Africa. For further information on Moody's approach to national scale credit ratings, please refer to Moody's Credit rating Methodology published in May 2016 entitled "Mapping National Scale Ratings from Global Scale Ratings". While NSRs have no inherent absolute meaning in terms of default risk or expected loss, a historical probability of default consistent with a given NSR can be inferred from the GSR to which it maps back at that particular point in time. For information on the historical default rates associated with different global scale rating categories over different investment horizons, please see https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1216309.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.Information sources used to prepare the rating are the following: parties involved in the ratings, public information, and confidential and proprietary Moody's information.The ratings have been disclosed to the rated entity prior to public dissemination.A general listing of the sources of information used in the rating process, and the structure and voting process for the rating committees responsible for the assignment and monitoring of ratings can be found in the Disclosure tab in www.moodys.com.mx.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. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.mx.For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.In compliance with regulatory requirements, Moody's de Mexico has been informed that within the two-month period prior to the date hereof, Fitch Ratings and Standard and Poor's have assigned a rating of AA+(mex) and mxAAA only to the securities mentioned as follows OMA13 and OMA14, the securities not mentioned doesn't have a previous rating granted by another rating agency.This credit rating is subject to upgrade or downgrade based on future changes in the financial condition of the Issuer/Security, and said modifications will be made without Moody's de México S.A. de C.V accepting any liability as a result.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 https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1243406.At least one ESG consideration was material to the credit rating action(s) announced and described above.Moody's considers the quality of information available on the rated entity, obligation or credit satisfactory for the purposes of issuing a rating.Moody's adopts all necessary measures so that the information it uses in assigning a rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.Please see Moody's Rating Symbols and Definitions on www.moodys.com.mx for further information on the meaning of each rating category and the definition of default and recovery.Please see ratings tab on the issuer/entity page on www.moodys.com.mx for the last rating action and the rating history. The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see our website www.moodys.com.mx for further information.Please see www.moodys.com.mx for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.The ratings issued by Moody's de Mexico are opinions regarding the credit quality of securities and/or their issuers and not a recommendation to invest in any such security and/or issuer.Please see the ratings tab on the issuer/entity page on www.moodys.com.mx for additional regulatory disclosures for each credit rating. Roxana Munoz Asst Vice President - Analyst Project Finance Group Moody's de Mexico S.A. de C.V Ave. Paseo de las Palmas No. 405 - 502 Col. Lomas de Chapultepec Mexico, DF 11000 Mexico JOURNALISTS: 1 888 779 5833 Client Service: 1 212 553 1653 Michael J. Mulvaney MD - Project Finance Project Finance Group JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Releasing Office: Moody's de Mexico S.A. de C.V Ave. Paseo de las Palmas No. 405 - 502 Col. Lomas de Chapultepec Mexico, DF 11000 Mexico JOURNALISTS: 1 888 779 5833 Client Service: 1 212 553 1653 © 2021 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.CREDIT RATINGS ISSUED BY MOODY'S CREDIT RATINGS AFFILIATES ARE THEIR CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE APPLICABLE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S CREDIT RATINGS. 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