The San Diego County Regional Airport Authority issued $1.06 billion in bonds to fund a new terminal at San Diego International Airport (SDIA).
The authority sold the bonds in two series. The tax-exempt Series 2023A bonds, consisting of $74.7 million, mature between 2024 and 2058, yielding between 3.49% and 4.89%. The taxable Series 2023B bonds, consisting of $987.3 million, mature between 2028 and 2058, yielding between 4.36% and 5.34%. The securities received a rating of AA- from Fitch Ratings and A1 from Moody’s Investors Service.
“The ratings reflect SDIA’s sizable origination and destination (O&D) enplanement base in a growing metropolitan area,” Fitch analysts wrote. They added that “the airport benefits further from its diversified airline market share, various non-airline revenue streams, and robust liquidity position.”
The issuance comes amid mounting passenger demand for flights, putting pressure on airports across the country to increase their capacities. SDIA served 25 million passengers in 2019. It expects that figure to increase to 39 million by 2035, according to the official statement accompanying the sale of the bonds.
The bond proceeds will finance the $3.46 billion renovation of SDIA’s Terminal 1. The project will increase the number of gates at the terminal from 19 to 30, creating room for more planes and flights. The first phase of the project is expected to complete in 2025.
Terminal 1 is the oldest at SDIA. It was built in 1967 and renovated in 1994 and 1997.
The bonds are special obligations of the authority, payable by airport revenue.
Jefferies LLC served as lead underwriter on the issuance, purchasing the bonds at a discount of almost $10 million.