Research Update: Australia Pacific Airports 'BBB+' Ratings Affirmed On Ability To Absorb Rising Capital Needs; Outlook Stable

We expect Melbourne Airport, the major asset of Australia Pacific Airports Corp. Ltd. (APAC), to expand its capital spending (capex) over the next several years, particularly as it embarks on construction of a third runway. The amount of capex that will be required is currently unknown. Using our assumption of about A$1.6 billion in capex over fiscals 2026 (ending June 30, 2026) and 2027, we believe APAC's ratio of funds from operations (FFO) to debt would remain about 8.3% during this period. We therefore affirmed our 'BBB+' long-term issuer credit rating on APAC and the 'BBB+' issue ratings on the airport's rated debt. The stable rating outlook reflects our expectation that APAC will undertake major projects, including the third runway,

...- We expect Melbourne Airport, the major asset of Australia Pacific Airports Corp. Ltd. (APAC), to expand its capital spending (capex) over the next several years, particularly as it embarks on construction of a third runway. The amount of capex that will be required is currently unknown. - Using our assumption of about A$1.6 billion in capex over fiscals 2026 (ending June 30, 2026) and 2027, we believe APAC's ratio of funds from operations (FFO) to debt would remain about 8.3% during this period. - We therefore affirmed our '###+' long-term issuer credit rating on APAC and the '###+' issue ratings on the airport's rated debt. - The stable rating outlook reflects our expectation that APAC will undertake major projects, including the third runway, only after seeking appropriate commercial agreements with airlines as well as equity commitments from its shareholders....

Research Update