Press Release|Public Finance

KBRA Assigns Long-Term Ratings of A to Series 2023A&B of Chicago Midway Airport Senior Lien Revenue Bonds; Affirms A Rating on Outstanding Second Lien Bonds; Outlook is Stable

11 Oct 2023   |   New York


KBRA assigns a long-term rating of A with a Stable Outlook to the City of Chicago – Chicago Midway Senior Lien Airport Revenue and Refunding Bonds Series 2023A (AMT) and Senior Lien Refunding Bonds, Series 2023B. Additionally, KBRA affirms the long-term rating of A, and Stable Outlook, on the Airport’s outstanding Second Lien Revenue Bonds.

Key Credit Considerations

The rating actions reflect the following key credit considerations:

Credit Positives

  • Strong, diverse, expansive air trade area supports O&D activity
  • Ranks as the third busiest airport in its dominant carrier’s (Southwest) route system as measured by enplanements and scheduled seat capacity
  • Residual agreements obligate airlines, mainly Southwest, to absorb necessary rate and rental charge increases

Credit Challenges

  • High level of carrier concentration, as Southwest accounts for nearly 90% of enplaned passenger activity
  • Narrow debt service coverage, reflecting an adequate, although strengthened, rate covenant and residual airport use agreement
  • Non-airline revenue performance ranks among the lowest of U.S. commercial airports

Rating Sensitivities

For Upgrade

  • Diversification of the carrier mix with concurrent enplanement growth
  • Successful transformation of terminal concessions, resulting in enhanced non-airline revenue support

For Downgrade

  • Significant reduction in Southwest Airlines operations at Midway

To access rating and relevant documents, click here.


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