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Gatwick Airport Finance (GTWICK Secured; Ba3 Pos/BB) Fitch Upgrade

TRANSPORTATION
  • Fitch upgraded the Holdco GAF Secured notes to BB overnight while leaving the ring-fenced Gatwick Group/Funding (secured) bonds unch at BBB+.
  • That leaves GAF back at a 2-notch for the substructural subordination vs. the 3 Fitch was applying due to a past dividend lock-up (restricting cash flows from being upstreamed).
  • At this holdco/GAF level it only has a single £450m April 26s. Mids unch at 6%/T+200.
  • Group has headroom for ratings (net 4.5x vs. 6.5x) but Fitch expects shareholder distributions to resume bringing that higher.
  • Moody's already applies 2-notch subordination and is on positive outlook (Baa2/Ba3) waiting to see where BS leverage will sit this year.

-Gatwick is London's 2nd largest airport owned (in slight majority) by Vinci (A3/A-) and GIP (PE). It is nearly half exposed to passengers using budget carrier EasyJet (Baa2/BBB Pos).

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