Mexico's airport mega project scores high on S&P's Green Evaluation

Tuesday, August 1, 2017

The new Mexico City international airport shows transparency in the use of proceeds reporting and good governance in decision making, and in addition to efforts to attain LEED certification meant that the airport trust's senior secure bonds received the highest score in a "Green Evaluation" done by credit ratings agency Standard & Poor's.

This is according to José Coballasi, senior director, utilities & infrastructure, at the agency.

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"The reports and guidelines on the management of the resources are clear and transparent. Furthermore, what really played a significant factor in the evaluation is the (operator's) decision to aim for the LEED certification for the terminal, the transport center and the air traffic control areas," Coballasi told BNamericas.

According to the analyst, the fact that the airport will be one of the few in the world to achieve a carbon neutral footprint was also a significant element in the assessment.

The results of the green evaluation of the airport trust's secure notes were published last week. In a note to investors, S&P said that the trust had obtained a score of E1/77. E1 is the highest score in the ratings agency's scale (E4 is the lowest).

Other factors that contributed to the high score, according to the agency, were the fact that the airport will operate with 100% renewable energy and achieve reductions of 30% in water consumption and 40% in energy use in comparison to the existing airport.

As regards the project financing, S&P's evaluation notes the fact that although airport operator GACM has not considered the creation of specific subaccounts to isolate green bond proceeds, the entity has committed to prepare and disclose quarterly reports showing the allocation of funds to eligible green projects during the construction period.

"Our green evaluations are not credit ratings," Coballasi said. "This evaluation contemplated all the planned tranches of senior secured bonds that Mexico City Airport Trust intends to issue through 2020," he noted.

The methodology for green evaluations was first drawn up by S&P in April this year, according to Coballasi.

The evaluations "are opinions on a project's asset-level environmental impact that builds upon frameworks of governance and transparency and considers approaches for climate resilience and environmental impact," the ratings agency stated in a note.

As part of the project's financing structure, GACM set up a special purpose trust with the aim of securitizing the bills from passenger charges collected at both the current Benito Juárez international airport in the capital and the future airport.

The trust plans to issue up to US$6bn in 'green' senior secured notes. The first issue took place last year and raised US$2bn.

The airport is the second largest in the world currently under construction and requires an estimated investment of US$10bn. The first phase involves three runways with capacity to handle up to 50mn passengers a year. When completed, the airport will have six runways and capacity of 120mn passengers.

To access the full evaluation, click here.