Growing population and its status as a tourist destination has Southwest Florida International Airport eying a new concourse in its main terminal and Lee County, Florida, will issue $681.3 million of bonds to fund the construction, but one rating agency stated concern about the facility's $2 billion capital improvement plan.
Lead underwriter BofA Securities is scheduled to price on Feb. 26 the $464.1 million alternative minimum tax-eligible Series 2026A-1 revenue bonds, with
J.P. Morgan and Raymond James are co-underwriters. PFM is the municipal advisor and Nabors, Giblin & Nickerson is bond counsel on the deal.
The bonds are rated A2 by Moody's Ratings, A by Fitch Ratings, and AA-minus by KBRA. All give stable outlooks. S&P Global Ratings rated Lee County airport revenue bonds A in September 2024 but hasn't put out a report for this issue.
If the Series 2026A-2 bonds can't be tendered, investors will receive a stepped-up coupon rate, to be determined when the bonds are sold, said Victoria Moreland, chief communications and marketing officer for the Lee County Port Authority. "They will remain outstanding until their maturity unless they are tendered prior to maturity."
"Put bonds are not that unusual for airports," according to Cumberland Advisors Vice President and Chief Investment Officer John Mousseau. "Really, the airport [is] taking advantage of the steep yield curve and willing to remarket bonds in a few years, betting the remaking of both puts (or bonding out) is a better deal than issuing long bonds now."
Proceeds from the Series 2026A-1 and A-2 bonds will be used primarily to complete Concourse E at the Main Terminal building. Proceeds from the Series 2026B bonds will be used to refund Series 2015 bonds and to build a public safety building.
But KBRA noted the airport's $2 billion capital improvement plan, which will elevate debt and operating costs, presents a credit challenge, as is the increased costs and lengthened construction schedule associated with the redesign of phase 1 of the Terminal Expansion Program.
Moreland noted the airport received grants for much of the cost of the runway rehabilitation and rental car and parking expansion projects. As for the increased costs and schedule, Moreland said, "After the completion of the redesign, the board approved an increase to the project budget and revised the 42-month schedule in March 2025." Since then, she said, the projects are on schedule and within budget.
Moody's expressed concern that debt per enplanement would peak at $300 in 2026.
"I understand the concern about the debt levels, but if they do peak in 2026, that risk is diminished," said Joseph Krist, publisher of Muni Credit News. "Although debt is above average, it is manageable," he said.
Nine airlines, accounting for 95% of market share, signed a 10-year use agreement with the airport in October 2024.
The presence of the big four airlines, without a dominant carrier, "is also a plus," Krist said.
Delta's 21.5% share in fiscal 2025, topped other carriers at the facility, according to the airport.
Mousseau said the climbing wealth characteristics of the Naples area allay his worries about debt per enplanement levels.
Moreland said the airport's "ongoing terminal projects represent years of coordination and planning between the [Lee County] Port Authority and the airlines serving our market."
The aforementioned airline use and lease agreement protects "our most crucial financial metrics, including debt service coverage," Moreland said. It reflects the nine carriers' "commitment and desire to grow in our high yield market." Moreland said.
"The rating agencies have commended the agreement, listing it as a credit strength safeguarding the long-term finances of the Port Authority," she said. "As the rating agencies pointed out, [the airport's] debt and cost metrics will remain competitive relative to other medium-hub airports undertaking major capital programs."
KBRA noted tourism or discretionary travel prevails at the airport, making it susceptible to an economic downturn. But analysts shrugged off this concern.
"Yes, the market for the airport is clearly discretionary but the area has traditionally attracted a fairly economically strong tourist
While economic downturns are a concern as they can impact discretionary spending, Mousseau said, with "southwest Florida having grown so much since COVID," with people moving there and also vacationing in the region, "I think that mitigates concern. The issue is much different for a Las Vegas or New Orleans."
But Moreland pointed to the region's "resiliency."
Southwest Florida International "was one of the fastest recovering airports after COVID. Similarly,
Lee County boasts a growing population base and resilient tourism sector, Moody's said. Airline traffic exceeds pre-pandemic highs. Moody's said its rating reflects that the airport lacks direct competition and its strong diversity of carriers.
"The rating further incorporates the airport's strong liquidity and the strength of the Concourse E Coverage Protection featured in the airport's new 10-year airline use and lease agreement through fiscal 2034, which allows [the airport] to recoup costs associated with the Concourse E project to achieve adequate net revenue debt service coverage ratio of 1.45 times," Moody's said.
KBRA agreed the airport's air carrier diversity and enplanements are credit strengths, and the airport benefits from sound operating performance, strong liquidity, and good debt service coverage, stemming from healthy non-airline revenues.
While Fitch's comments echoed the others, it noted the airport's outstanding debt is fixed rate and fully amortizing.
The airport is 15 miles from the nearest city, Fort Myers.
The Lee County Port Authority said in its investor presentation the airport has enjoyed a 13.7% compound annual growth rate in revenue from fiscal 2019 to fiscal 2025, significantly exceeding the 7.8% compound annual growth rate of expenses in that time.
The airport's fiscal year ends on Sept. 30.
Days cash on hand has gone up and down since fiscal 2019, but as of fiscal 2025 was 675 days, up from the 669 days in fiscal 2019, according to the investor presentation.
The Port Authority said about 63% of its roughly $2 billion CIP from fiscal 2025 to fiscal 2031, is expected to come from bonds, according to the presentation.
The Port Authority expects Concourse E to cost $1.07 billion and be completed in fall 2027. It will be 215,000 square feet with 14 aircraft gates, nine lanes of Transportation Security Administration lanes, connectivity between all concourses and ticket counters. Total airport gates will increase to 42 from 28.
