Wall Street Bankers, Muni Buyers Welcome Airport Building Boom

(Bloomberg) -- Flyers aren’t the only ones benefiting from efforts at U.S. airports to make themselves bigger and better. The $3.8 trillion municipal-bond market, desperate for new bond deals, is reaping gains from the billion-dollar revamps.

The Dallas Fort Worth International Airport, the nation’s fourth busiest, is the latest to announce an expansion, saying it intends to spend as much as $3.5 billion for a new terminal and other projects. Kansas City International and Chicago O’Hare International Airports have also kicked off big construction plans to keep up with the growing volume of passengers.

Read more: DFW Airport Maps $3.5 Billion Upgrade as Sixth Terminal Planned

Nearly $15 billion of bonds were issued for airports last year, marking one area of growth for a market where the pace of borrowing fell by 22% after President Donald Trump’s tax-cut law did away with a key refinancing tactic, according to long-term issuance data compiled by Bloomberg. While there’s only been about $3.8 billion this year, the pace seems poised to accelerate as cities look to invest in aging facilities to make room for an increasing number of passengers.

Municipal-bond bankers and investors alike have been desperate for new bond deals. Long-term debt sales have risen by only about 8% from last year’s depressed level. And buyers have been pressured by cash flooding into mutual funds, increasing the competition to land a piece of new debt offerings.

Kansas City officials have approved issuing $1.8 billion of bonds for that city’s airport renovation, with some expected to be sold in the summer. Next month, the operator of the Reagan National and Dulles International airports in Washington is selling about $560 million of debt to help fund projects in its $2 billion capital construction plan, according to bond documents.

The DFW Airport project is expected to be financed by bonds and repaid by airlines’ rates and fees. Cynthia Vega, spokeswoman for DFW Airport, said the details have yet to be worked out.

--With assistance from Justin Bachman and Sophia Sung.

To contact the reporter on this story: Amanda Albright in New York at aalbright4@bloomberg.net

To contact the editors responsible for this story: James Crombie at jcrombie8@bloomberg.net, Michael B. Marois, William Selway

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