Changi Airport Group gets highest rating from Moody's

Moody's assigns a first-time Aaa issuer rating for the public airport operator.

Changi Airport Group (CAG) was given the highest issuer rating of AAA by international credit rater Moody's, a first time for the airport operator.

At the same time, Moody's also assigned a first-time provisional AAA senior unsecured rating to CAG's multi-currency medium term notes programme.

Moody's ratings outlook for CAG is stable.

"The baseline credit assessment (BCA) recognizes CAG's underlying credit strengths, which include its position as Singapore's sole airport operator, its conservative and
prudent balance sheet management, and its high financial flexibility," said Ray Tay, a Moody's Senior Vice President. "These factors will help buffer CAG's credit profile against the current turbulence in the sector."

Moody's expects the government to support CAG in times of need, as it has the crucial role of operating the Lion City's only two civilian airports: Changi and Seletar. The government's full and direct ownership of the company also lowers the risk of loaning to the company.

While the aviation sector was among the hardest hit by the pandemic, Moody's expects CAG to recover strongly post-pandemic by the fiscal year of 2023-2024.

"This trajectory incorporates our assumptions of (1) the aviation sector's recovery in 2023-2024; and, (2) a measured approach to the capital spending plan to increase capacity via the Changi East expansion project, which is currently partially paused, and which factors in a balanced diversified funding plan," Moody's said.

Whilst an upgrade to its BCA is unlikely during the pandemic, it could occur of the CAG's adjusted funds from operations to debt ratio exceeds 25% on a sustained basis, and further clarity on the funding plan for Changi East.

A downgrade of Singapore's ratings, currently at Aaa, could result in a downgrade for CAG. Moody's could also downgrade CAG's ratings if support from its shareholders weaken over time, but said that scenario is unlikely.