Chicago sold $513.5 million in bonds to finance improvements to Chicago Midway International Airport (MDW).
The city sold the bonds in two series. The taxable Series 2023A bonds, consisting of $211 million, mature between 2027 and 2053, yielding between 4.5% and 5.48%. The tax-exempt Series 2023B bonds, consisting of $302.5 million, mature between 2025 and 2036, yielding between 3.86% and 4.4%. The securities received an insured rating of AA from S&P Global Ratings and underlying rating of A from Fitch Ratings and Kroll Bond Rating Agency.
“The rating reflects Midway’s established strength as a primary hub location for Southwest Airlines (Southwest; BBB+/Stable) and the robustness of the underlying Chicago air service market, offset by MDW’s slightly elevated leverage position from prior capital works,” Fitch analysts wrote.
A series of recent near misses at U.S. airports has cast a spotlight on aviation infrastructure, especially as passenger traffic returns to prepandemic levels. At MDW, traffic has neared historic peaks. The airport’s enplanements through August were 6% higher than 2019 levels, according to the official statement accompanying the sale of the bonds.
The bond proceeds will fund $60 million in improvements toward airport projects to be completed this year. These include restroom modernization, baggage handling improvements, and upgrades to fuel infrastructure. The bonds will also refund previously issued securities.
MDW is the second-busiest airport in Chicago and a base for Southwest Airlines, which accounts for 90% of the airport’s passengers. The bonds are limited obligations of the city, payable by airport revenue.
Jefferies LLC served as lead underwriter on the issuance, purchasing the bonds for $529.4 million.