Tampa International Airport (TPA), an essential hub within the vibrant Tampa Bay area, is gearing up to issue approximately $484 million in senior bonds that are eligible for alternate minimum tax. This initiative is particularly significant, considering it arrives hot on the heels of a ratings upgrade from Fitch Ratings—an endorsement of the airport’s increasing financial strength. The bonds, being issued by the Hillsborough County Aviation Authority, bear commendable ratings: Aa3 by Moody’s, AA-minus by Fitch, and AA from Kroll Bond Rating Agency. Such high ratings, especially following Fitch’s upgrade of the airport’s subordinate debt from A-plus to AA-minus, suggest growing investor confidence in TPA’s operational viability and creditworthiness.
The Series 2024B bonds will feature serial maturities that extend from 2017 to 2044, with additional term maturities in 2049 and 2054. Investors will have the option to call these bonds at par on a specified date, enhancing their appeal. As Ken Cushine of Frasca & Associates, the municipal advisor on this venture, noted, the market is showing “really good interest” in these offerings, particularly among insurance companies, banks, and bond funds, indicating a robust demand for such financial instruments.
The impetus behind this bonds issue is largely driven by a projected increase in passenger demand. With the popularity of the Tampa Bay area as a major destination—drawing visitors not just for its beaches but also for its proximity to Orlando—TPA’s relevance in the aviation sphere remains strong. The long-anticipated train service connecting Tampa to Orlando International Airport is expected to further bolster this trend, likely increasing passenger traffic even more.
The funds raised from these bonds will primarily finance the construction of Airside D, a significant enhancement to TPA’s facilities intended to accommodate growing passenger numbers. Designed to include 16 swing-gates for domestic and international flights, and expected to cost around $1.5 billion, this initiative indicates TPA’s forward-looking approach to meeting travel demand. Additionally, an automatic people mover guideway connecting Airside D with the main terminal—priced under $100 million—highlights the airport’s commitment to improving passenger convenience and operational efficiency.
The financial health of TPA reflects positively on its operational management. Moody’s noted critical strengths, including a strong competitive edge within the region, bolstered by impressive passenger growth statistics. TPA experienced 11.56 million enplaned passengers in the fiscal year 2023, surpassing 2019’s record year of 11.09 million. The forecast for fiscal 2024 shows a significant 10.1% year-on-year increase in the number of passengers, indicating robust market performance.
Moody’s Aa3 rating also recognizes the airport’s capacity to levy an ad valorem tax, a financial tool that has not been utilized since 1973 yet represents a safety net for future revenue generation. Despite the airport’s strong financial position, it faces challenges from a comprehensive capital program estimated at $3.5 billion through fiscal 2030, which will necessitate the issuance of about $1.7 billion in new debt. The pressure of this significant financial commitment could potentially affect the airport’s long-term liquidity and operational flexibility.
Looking ahead, TPA anticipates a compound annual growth rate of 3.2% in passenger activity through fiscal 2030. The airport’s primary catchment area covers six counties with a combined population of approximately 4.2 million, and with Florida projected to experience rapid population growth, TPA could see further increases in demand.
Moreover, nearly 30% of households within this primary catchment area earn upwards of $100,000, significantly higher than the national average. This affluence positions TPA favorably when competing with surrounding airports. While there are fluctuations tied to tourism and environmental concerns, including the impact of hurricanes, the airport’s strategic position appears resilient.
Tampa International Airport’s upcoming bond issuance marks a vital step forward in bolstering its infrastructure to accommodate increasing demand while reflecting its strong financial footing. The recent upgrade from Fitch Ratings serves as a testament to its ongoing relevance in a competitive marketplace. The forward-thought and strategic investments being made today ensure that TPA maintains its position as a pivotal transportation hub in a rapidly growing region. With robust passenger traffic projections and a sound financial strategy, the future looks bright for Tampa International Airport, positioning it well within the landscape of U.S. air travel.