DALLAS — Dallas-Fort Worth International Airport, the top issuer in the Southwest this year, is pricing $367 million of revenue bonds Thursday for its $2 billion terminal remodeling program.
This week's deal, negotiated through Jefferies, Siebert Brandford Shank & Co., Barclays and Cabrera Capital Markets, will bring DFW's issuance to nearly $1.2 billion for the year.
DFW ranked first in total issuance for the calendar year 2012 after a record series of refundings. The airport retains the top rank in 2013, according to data from Thomson Reuters.
With rates remaining near historic lows, DFW this year decided to accelerate debt issuance for the remodeling of the airport's four original terminals, which opened in 1974.
The accelerated debt issuance schedule prompted a ratings downgrade to A2 from A1 by Moody's Investors Service in March, just ahead of an $800 million deal.
"The downgrade and A2 rating is based on the marked increase in the airport's expected debt level as it accelerates debt issuance in support of the Terminal Renewal and Improvement Program," Moody's analysts wrote. "Total debt outstanding, already among the highest in the nation for airports, is expected to become the highest during 2013."
This week's deal carries the Moody's A2, along with an A-plus from Standard & Poor's and an A from Fitch Ratings. The bonds mature from 2026 through 2045.
First Southwest Co. serves as financial advisor with Estrada Hinojosa & Co. McCall Parkhurst & Horton acts as bond counsel with Bracewell & Giuliani and Newby Davis.
The airport has about $6.1 billion in principal outstanding, including the estimated this week's issue, with a final maturity of Nov. 1, 2050. All outstanding debt is fixed rate with no derivative exposure, analysts note.
One cloud over the airport is the continuing bankruptcy proceedings of American Airlines and its planned merger with US Airways. The combined carrier plans to operate a normal schedule at DFW and has told airport officials that it will continue funding TRIP.
On July 18, 2012, American Airlines assumed all of its unexpired leases for nonresidential property at DFW airport, including the use agreement, and paid about $11 million to the airport to cure defaults and pre-petition obligations under the leases. The combined American-US Airways would create the world's largest airline.
The airport is in the middle of a $4.2 billion capital improvement program that will produce more than $6 billion of peak debt outstanding. The largest component of the CIP is the TRIP, which will cost about $2 billion between 2010 and 2018. TRIP currently has more than $900 million under contract, and management expects the project to continue on schedule and within budget.
"We view the overall program, which includes other infrastructure and maintenance projects, as achievable — but there is exposure to increases in cost and scope, as well as inflation," wrote S&P analyst Todd Spence in his June 11 report.
Forecasted peak debt in 2016 is approximately $6.65 billion, raising debt per enplaned passenger to $220, Spence noted.
