Tampa International Airport (TPA) is charting a strategic course in financing its expansion plans by pricing $484 million in alternate minimum tax eligible senior bonds. This landmark initiative comes closely on the heels of a recent credit rating upgrade by Fitch Ratings, underscoring the airport’s solid financial footing and the ongoing demand for air travel in the region.
The financing in question involves bonds issued by the Hillsborough County Aviation Authority, rated favorably by major rating agencies: Aa3 by Moody’s, AA-minus by Fitch, and AA by Kroll Bond Rating Agency. Such ratings are not arbitrary; they reflect a consistent pattern of sound fiscal management and an evolving market context for TPA. The Series 2024B bonds feature a structure of serial maturities ranging from 2017 to 2044, with additional term maturities set for 2049 and 2054. Stakeholders are especially keen on the callable feature, allowing for flexibility in managing debt obligations, an assurance as remarked by Ken Cushine, the municipal advisor on the deal.
This bond initiative not only aims to secure the necessary capital for ongoing and future projects but also serves to bolster investment sentiment in the airport’s financial strategies amidst a burgeoning tourism landscape in the Tampa Bay area.
Joseph Krist of Muni Credit News aptly highlights the competitive dynamic in Florida’s tourism sector, stating that TPA stands to benefit from the rising tide of visitors drawn to the vibrant communities around Tampa and St. Petersburg. The anticipated launch of a train service to Orlando will only enhance the airport’s allure, facilitating easier access for international tourists.
The interest in these bonds seems robust, with the majority of interest coming from institutional players like insurance companies and bond funds, signaling confidence in the airport’s vision and operational performance. The strategic decision to engage known financial partners such as JPMorgan, Barclays, BofA Securities, Raymond James, and RBC Capital Markets adds another layer of credibility to the initiative.
Part of the capital raised through these bonds will be allocated towards the ambitious construction of Airside D, which promises to add 16 domestic and international swing-gates. This is pivotal in accommodating the growing passenger numbers, which, according to Moody’s, have seen an upward curve, with 11.56 million enplaned passengers recorded in fiscal year 2023, surpassing pre-pandemic figures.
Additionally, the project will introduce an automatic people mover, designed to seamlessly integrate Airside D with the main terminal, enhancing passenger experience and logistical efficiency. This commitment to infrastructure reflects a holistic approach towards sustained operational growth.
While Tampa International Airport’s current financial profile appears strong, Moody’s noted several risks that could alter this landscape, including the vulnerability to tourism-related volatility and the impacts of natural disasters like hurricanes, which have historically plagued Florida. However, the airport’s commendable liquidity ratio, which stood at 756 days as of September 30, 2023, acts as a buffer against unforeseen challenges.
Moody’s also pointed out the critical nature of the airport’s capital program, approximately $3.5 billion scheduled from fiscal 2025 to fiscal 2030. While extensive, this investment reflects a calculated risk to ensure the airport maintains its competitive positioning against nearby facilities like Orlando International Airport.
Fitch’s upgrade of the airport’s subordinate bonds further exemplifies the optimistic outlook. It mirrors the airport’s robust operational metrics and an effective framework for cost recovery, aligning rates in a manner that promotes both the airport’s growth and its financial health.
Projected growth for TPA is promising, with an expected compounded annual growth rate of 3.2% in passenger activity levels through fiscal 2030. The geographic catchment area is a demographic goldmine, encompassing a resident population primed for travel with a substantial segment earning above $100,000. This demographic highlight is critical as it indicates not only current demand but also significant growth potential for the airport.
As Tampa International Airport embarks on this expansive phase, driven by a potent combination of financing and strategic growth initiatives, it positions itself well to capitalize on a booming post-COVID-19 air travel market. Enhanced infrastructure, improved passenger services, and favorable economic conditions point towards a bright future for TPA as a pivotal player in Florida’s aviation landscape.