KBRA upgrades the long-term rating on Metropolitan Nashville Airport Authority's (MNAA) Senior Lien Airport Improvement Revenue Bonds to AA and the long-term rating on Subordinate Lien Airport Revenue Bonds to AA-. Concurrently, KBRA assigns a long-term rating of AA to MNAA's Series 2026A (non-AMT), 2026B (AMT), 2026C (non-AMT), and 2026D (AMT). The Outlook on all debt is Stable.

The rating upgrades reflect the strength of Nashville International Airport’s (BNA's or the "Airport's”), economically diverse and growing air trade area (ATA), which continues to drive increasing enplanements, predominantly origination and destination (O&D) oriented. The ATA has developed into a resilient, major tourist destination with a nationally recognized music industry, complementing its existing strengths in healthcare, higher education, and professional and business service sectors. Employment growth consistently exceeds State of Tennessee and national averages providing a stable, durable source of air service demand. These strengths combine to ensure the Airport’s costs per enplanement (CPE) remain low, providing the Authority headroom to implement a largely debt-financed capital improvement plan (CIP).

Key Credit Considerations

The rating actions reflect the following key credit considerations:

Credit Positives

• Strong air service demand, supported by a growing population and expanding, vibrant economy with a large institutional presence (state capital, higher education and health care).
• Established trend of strong enplaned passenger growth.
• Well-maintained financial operations, characterized by abundant coverage and considerable liquidity.
• Strong management oversight and maintenance of the CIP, with initial projects completed substantially on-time and under budget.

Credit Challenges

• Large, growth-driven, multi-year capital plan with inherent construction, implementation and completion risks.
• Considerable rise in outstanding debt to support capex, increasing the fixed cost component of the financial structure and debt metrics.

The Stable Outlook reflects KBRA’s expectation that continued, highly effective management of the CIP, coupled with healthy passenger traffic generated by the Airport’s growing, economically vibrant ATA, will help to moderate the expected, future increase in CIP related debt. Financial margins, although reduced, should comfortably exceed legal requirements.

Rating Sensitivities

For Upgrade

• Significant progress in meeting capital program milestones within budget and with limited impact on debt and financial metrics.

For Downgrade

• Secular decline in enplaned passenger activity.
• Significant debt issuance beyond the scope of identified projects, that sharply increases debt metrics.

To access ratings and relevant documents, click here.

Methodologies

• Public Finance: U.S. General Airport Revenue Bond Rating Methodology
• ESG Global Rating Methodology

Disclosures

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA), one of the major credit rating agencies (CRA), is a full-service CRA registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a Designated Rating Organization (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan’s Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.

Doc ID: 1012887

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