Dallas Fort Worth International Airport will enter the municipal bond market next week with a $750 million deal, boosted by a credit rating upgrade and an outlook revision to positive.
S&P Global Ratings has upgraded its rating to AA-minus from A+, citing the airport’s “relatively” strong boardings, its past financial stability and its stable debt service coverage. The rating outlook, which was positive before the upgrade, now remains stable at the higher rating.
“The upgrade is based on DFW’s improved financial performance, which we expect to continue over the forecast period (2025-2029) as the airport funds its large but manageable capital plan based on the recently renegotiated airline use and lease agreement and forecast financial results,” S&P analyst Ken Biddison said in a statement.
Bloomberg News
Moody’s Ratings downgraded the outlook on DFW’s A1 rating to positive from stable, saying the change reflected an increased likelihood that the capital program could be completed “without an undue increase in leverage.”
“This increasing probability is based on management’s efforts to date to de-risk the construction program, with approximately 64 percent of costs already contracted, a successful modular construction pilot, strong passenger growth and the maintenance of above-average liquidity,” the rating agency said, adding that the A1 rating “recognizes that significant pricing and execution risks remain.”
DFW’s capital improvement program, which includes construction of a sixth terminal and expansion of Terminals A and C, is expected to cost $8.6 billion through fiscal 2029. Outstanding debt of $7.224 billion is expected to grow to $12.4 billion through fiscal 2029 through future debt issuances, according to an investor presentation for the upcoming bond sale.
Airlines that signed a 10-year agreement with DFW that begins in October have pre-approved $5.1 billion of the program, it said.
While the COVID-19 pandemic caused the airport’s passenger traffic to drop dramatically in fiscal years 2020 and 2021, it has steadily increased since then, surpassing fiscal year 2019’s 73.3 million passengers with 79.7 million in fiscal year 2023. The airport forecasts 92.7 million passengers in fiscal year 2025, rising to 107.1 million in fiscal year 2029, the presentation said.
DFW, where American Airlines is the dominant airline, was the
The preliminary official statement on the tax-exempt, non-alternative minimum tax community revenue redemption and improvement bonds indicates a series and maturity structure. The deal, which is set to be priced on August 22, will repay approximately $450 million in outstanding extendable commercial paper, along with the issuance of approximately $300 million in new bonds. The debt is also rated A-plus by Fitch Ratings and AA by Kroll Bond Rating Agency, with a stable outlook.
Wells Fargo Securities, the
The underwriting team also includes JP Morgan, Academy Securities and Truist Securities. Co-bond advisors are McCall, Parkhurst & Horton and West & Associates. Co-financial advisors are Hilltop Securities and Estrada Hinojosa.
