The city of Chicago sold $181 million in bonds on behalf of its largest airport to refund a previous issuance.
The bonds, issued on behalf of Chicago O’Hare International Airport, mature between 2028 and 2043, yielding between 3.39% and 4.24%. Most of the bonds will be insured by a municipal bond insurance policy. The insured bonds received a rating of AA and the uninsured bonds received a rating of BBB+ from S&P Global Ratings.
“The rating action reflects recent favorable financial results that we believe are sustainable as rental car activity levels in 2023 and CFC collections have returned to business-as-usual performance following the declines experienced during COVID-19, and our view of the facility’s strong enterprise risk profile and adequate financial risk profile,” S&P Global Ratings Credit Analyst Kevin Archer said, referring to customer facility charges.
The issuance comes as airports across the country adjust to meet high demand for travel after years of pandemic-related slowdown. Such high demand has been confronted by air traffic controller shortages and aging aviation infrastructure, resulting in travel delays and some high-profile air traffic control failures. Experts say more funding is necessary to improve efficiency at U.S. airports.
CFCs are fees attached to car rentals picked up at airports, generally used to improve rental car-related infrastructure such as garages. After the pandemic disrupted travel, CFC collections at O’Hare dropped by more than half, and they are yet to recover. The airport collected $34 million in CFCs last year, compared to $40 million in 2019. However, the airport projects that CFCs could approach 2019 levels this year.
The bonds are limited obligations of the city of Chicago, payable by CFCs collected by O’Hare.
Barclays Capital Inc served as lead underwriter on the issuance.