The Burbank-Glendale-Pasadena Airport Authority sold $724.8 million in bonds to finance the replacement of an aging terminal.
The authority, which runs Hollywood Burbank Airport, issued the bonds in three series. The tax-exempt 2024 Series A bonds, consisting of $34.7 million, mature in 2054 and yield 4.2%. The taxable 2024 Series B bonds, consisting of $642.4 million, mature between 2031 and 2054, yielding between 3.78% and 4.64%. The taxable 2024 Series C bonds, consisting of $47.7 million, mature between 2028 and 2031, yielding between 5.12% and 5.2%.
The securities received an underlying rating of A- from Fitch Ratings, A2 from Moody’s Investors Service, and A from S&P Global Ratings. They received insured ratings of A1 from Moody’s and AA from S&P.
The authority will use the bond proceeds to fund the costly relocation of a terminal at Hollywood Burbank Airport, also known as Bob Hope Airport.
“The A2 rating reflects our expectation that the authority’s very strong financial position will moderate as it incurs significant debt to implement the Replacement Passenger Terminal (RPT) project over the next 3-5 years,” Moody’s analysts wrote.
The new terminal will replace one that was built in 1930. It will be 120,000 square feet larger than the old one and include the same amount of gates. The authority expects that the project will provide “a higher level of passenger service” and complete in October 2026, at a cost of $1.1 billion.
The authority plans to issue more bonds in 2026 to finance the rest of the costs. Its president said that a strong reception for the Series 2024 bonds laid the groundwork for an additional issuance. “The Authority and its financing team believe the overwhelming reception for the Bonds by the investment community provides a strong foundation for a second bond issue, anticipated to occur in 2026, to complete funding of the RPT Project,” AIrport Authority President Felicia Williams said in a press release.
The bonds are special obligations of the airport authority, payable by net airport revenue. The airport recorded $36.5 million in net revenue last fiscal year, according to the official statement accompanying the sale of the bonds.
BofA Securities, Inc served as lead underwriter on the issuance, purchasing the bonds for $751.4 million. Public Resources Advisory Group, Inc acted as financial advisor.