The San Francisco Airport Commission sold $794.3 million in bonds to refund previously issued securities.
The commission sold the bonds in two series. The taxable Series 2023C bonds, consisting of $748.4 million, mature between 2028 and 2048, yielding between 4.47% and 5.26%. The tax-exempt Series 2023D bonds, consisting of $45.9 million, mature on May 1, 2048, and yield 4.87%. The securities received a rating of A1 from Moody’s Investors Service and A+ from Fitch Ratings.
The rating reflects San Francisco International Airport’s (SFO) “strong operational and financial performance within the normally healthy, yet competitive air trade market in the San Francisco Bay Area,” Fitch analysts wrote.
The issuance comes amid San Francisco’s slow economic emergence from the COVID-19 pandemic. While air travel has returned to prepandemic levels at many U.S. airports, enplanements at SFO remain below 2019 levels amid lagging demand for flights to Asia and business travel.
Revenue is also yet to recover. The airport recorded $821 million in operating revenue for the 2021-22 fiscal year, compared to more than $1 billion in 2017-18, according to the official statement accompanying the sale of the bonds.
SFO is the 14th largest U.S. airport by passengers served. Almost half of enplanements are handled by United Airlines.
The bonds are special, limited obligations of the airport commission, payable by SFO revenue.
Barclays Capital Inc served as lead underwriter on the issuance, purchasing the bonds for $818 million. The price reflected a premium of $25 million and a discount of $1 million.