San Diego completes largest single bond sale by a Californian airport

The San Diego International Airport has completed a major bond financing totalling $1.94 billion, the bulk of which will be used to pay for a portion of the New T1 programme.

According to San Diego County Regional Airport Authority, the new bond will reduce financing costs on a present value basis by an estimated $386.5 million over the life of the programme when compared to the plan of finance approved by the Board of Directors in October.

Of the remaining portion of the bonds, approximately $357.2 million will be used to refinance existing debt that has been in place since 2013, resulting in net present value savings for the airport authority of approximately $52.7 million.

“The airport authority continues to be in a strong financial position and this bond sale reflects the market’s confidence in our ability to recover from the COVID-19 pandemic,” said president and CEO, Kimberly Becker.

“These funds allow us to continue the momentum of the New T1, providing funds for construction and in turn benefiting the region through jobs and economic investment.”

Investor demand for the airport authority’s bonds was said to be “very strong” with investors placing more than $7.7 billion worth of orders for the bonds which contributed to SDCRA achieving a record-low interest cost.

The bond sale’s advantageous circumstances were due to several factors, including pricing during a time when interest rates were more attractive, and the airport authority’s strong financial profile as evidenced by favourable credit ratings from Fitch Ratings and Moody’s Investor Services.

The New T1 plan, one of the most ambitious in the US, includes proposals for a new 1.2 million square foot terminal to replace the airport’s existing Terminal 1; new roadways to make it easier to access SAN; and airfield enhancements to improve the efficiency of airside operations.

The airport authority has also “preserved the opportunity for a connection to a potential future transit system”, which is most likely to be an Automated People Mover (APM).