The two airports closest to Washington, DC, sold more than $430 million in bonds to finance capital improvements.
The bonds were issued by the Metropolitan Washington Airports Authority, which manages Ronald Reagan Washington National Airport and Washington Dulles International Airport. The bonds mature between 2024 and 2053, with yields ranging from 3.75% to 4.75%. They received a rating of AA- from Fitch Ratings and S&P Global Ratings and a rating of Aa3 from Moody’s Investors Service.
The rating reflects the authority’s “very strong credit attributes, including the resilience of its complementary dual-large hub airport system serving the strong and growing District of Columbia air trade service area; well-balanced system-wide carrier mix; capital program progression at both airports; and its stable financial profile,” according to Fitch.
The bonds will lay the groundwork for ambitious improvements to Reagan and Dulles, including a new regional airline concourse, terminal redevelopments, and infrastructure upgrades. By 2027, the authority plans to spend $1.8 billion on improvements to the airports.
The issuance comes amid an increasing federal investment in overall U.S. infrastructure. In November 2021, President Joe Biden signed the Infrastructure Investment and Jobs Act, which directed $1.2 trillion toward U.S. infrastructure. Of that funding, $25 billion will go to U.S. aviation. So far, the program has authorized more than $22 million each in annual funding for Reagan and Dulles.
The funding will come as the aviation industry continues its ongoing recovery from the COVID-19 pandemic, which devastated demand for passenger air travel. In 2022, enplanements at Dulles were under 90 percent of 2019 levels, and enplanements at Regan were around the same as 2019 levels.
The bonds will be backed by revenue from the two airports. Generally, airport revenue comes in the form of rents charged to airlines and businesses operating in terminals, and fees charged to airlines and passengers.
Barclays Capital Inc served as lead underwriter on the issuance.