DFW Airport wins Kroll upgrade ahead of $1.15 billion refunding

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Dallas-Fort Worth International Airport’s revenue bonds gained a one-notch upgrade to AA from Kroll Bond Ratings Agency in advance of a $1.15 billion refunding deal.

The KBRA rating is the highest for the bonds that are expected to price next month.


Moody’s Investors Service rates the bonds A1, and S&P Global Ratings rates DFW revenue bonds A-plus. Outlooks are stable.

“The rating revision reflects continued strong management performance, a growing and diversifying service area, enduring locational advantages for hubbing resulting in favorable utilization, and a footprint that accommodates future capacity needs, and non-airline revenue generation,” KBRA’s lead analyst Harvey Zachem wrote. “In KBRA’s opinion, prospective debt issuance over the next 10 years will hike debt metrics, however, we believe the debt will prove manageable and the capital projects undertaken will serve to further solidify DFW’s preeminent position.”

DFW's status as a fortress hub for American Airlines Group and its location in the middle of North America supports demand for the airport's planned expansion, according to Moody’s.

DFW is conferring with American on plans for a new terminal and redevelopment of an existing terminal. That project will be part of DFW’s next round of new money debt.

Analysts consider the airport in a position to keep boarding costs within American’s parameters. Debt service requirements peak at $517 million in 2022, and then decline gradually, analysts said.

“This structure accommodates future bond issuance, which is anticipated to be in the $5 billion range over the next 10 years, while keeping annual debt service requirements level,” Zachem noted. “Airline cost per enplanement was $12.90 in FY 2018 and is projected to grow to the $17.50 to $19.50 range by FY 2030. KBRA concerns over this heightened metric are offset by the high yield achieved by American at DFW, and the fact that DFW is American’s most profitable hub.”

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