Green bonds centerpiece of $1 billion Atlanta airport deal

Atlanta plans to sell $1.03 billion of bonds for Hartsfield-Jackson Atlanta International Airport next week, of which $927 million will be green bonds.

The airport general revenue bonds will come in the form of $52 million in Series 2025A green tax-exempt bonds, the $927 million in Series 2025B-1 green bonds, tax exempt but subject to the alternate minimum tax, and $52 million in Series 2025B-2 AMT bonds. 

The bonds are rated Aa3 by Moody’s Ratings, AA by S&P Global Ratings and AA-plus by KBRA, all with stable outlooks.

JP Morgan Securities is the bookrunning senior manager and Siebert Williams Shank & Co. is the co-bookrunning senior manager. 

All three series are planned to have serial maturities 2026 to 2045 and term maturities in 2050 and 2055. They will be callable at par in July 2035. 

Frasca & Associates is the municipal advisor and Frasca Principal Juan Pittman said he expected the bonds’ green status would attract some interest. 

Outside party Kestrel has said the Series 2025A and 2025B-1 bonds are eligible for green bonds designation. The bond proceeds are to be used to meet green building and sustainable infrastructure standards to advance climate action goals. The money will be used for projects that will reduce energy demands.

The airport has the goal of 100% clean energy by 2035 and net zero emissions by 2050. The bonds will help it attain these goals, it says.

The bonds’ green standard is the International City/County Management Authority’s green bond principles. The airport is seeking to conserve water, reduce waste diversion and improve stormwater protection. 

The bond proceeds will be used for nine projects, with four of them using the green bond proceeds. The green bonds’ biggest project supported is a widening of Concourse D and the building of a Delta Sky Club facility above it. 

The airport has installed solar panels on its rooftop and has committed that all new construction must achieve a silver certificate or better from the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) program. 

Over the years the airport has managed a 40% reduction in water use, a 87% diversion of construction and demolition waste from landfills. According to its July 2025 report, 11% of its energy comes from renewable sources.

So far, reports of declining international travel to the U.S. haven’t been borne out by the numbers at Atlanta.

Through the first six months of 2025, international passenger numbers were up 3.37%, to more than 8.9 million, according to the airport’s data.

It was domestic passenger numbers that fell 1.52% to a still-robust 53.18 million, leading to a 0.85% drop in total passenger numbers to 62.09 million for the half.

All of that loss and then some can be attributed to Southwest Airlines, which carried almost 40% fewer passengers year-over-year after reducing service to Atlanta amid a cost-cutting process.

The airport credit is well-positioned to withstand far more serious pressure, according to Atlanta Treasurer C. Courtney Knight.

A stress test that reduces overall passengers by 19% (origin and destination passengers by 10% and connecting passengers by 25%) or 10 million enplanements is included in the preliminary official statement that is also available to the rating agencies, he said.

“Even in this scenario, [the airport] maintains healthy debt service coverage over the next few years,” Knight said. “The rating agencies have already factored potential economic impacts on [the airport] into their calculations before issuing their ratings. [The airport] does not foresee the above concerns affecting the bonds’ credit.”

Air travel remains in heavy demand said John Hallacy, president of John Hallacy Consulting LLC, noting that the Transportation Security Administration reported that a record number of passengers passed through its screening over the Labor Day weekend.

Delta and its affiliates accounted for 78% of total Atlanta enplanements in fiscal year 2024, which is among the highest primary carrier concentrations for U.S. airports, Moody’s said. Moody’s and the other ratings agencies identify this as a potential weakness for the airport if Delta were to stop using it as a hub. 

Hallacy and Muni Credit News Publisher Joseph Krist said the chance of Atlanta-headquartered Delta, which reported a $1.8 billion profit in the most recent quarter, de-hubbing the airport was slight. 

The bonds are to support a $12.6 billion capital improvement program through fiscal 2031. Of this, 57% is expected to be debt funded, according to an investor presentation about the deal. Over the next few years the airport’s annual debt payments will increase, which the ratings agencies have factored into their ratings. 

In the fiscal year ending 2025 the airport had 8% more air cargo and mail flights, Knight said. Operating revenues increased 8.9% over a year earlier. The airport had $945 million in unrestricted cash as of June 30. 

General revenue bond debt service coverage is projected to remain above 1.6 times through 2031, he said. 

“One consideration is how much this airport will be able to continue to expand,” Hallacy said. “Buyers will keep a watch on the aggregate level of debt per enplanement over time and whether the level continues to be manageable.”

In its August report on the airport Moody’s pointed to Hartsfield-Jackson’s dominant market position as one of the most traveled airports in the world and Delta’s largest hub. Moody’s also noted the airport’s rising origination and destination traffic, supported by a service area with a large and expanding population.  Origination and destination traffic increased to 43% in fiscal 2024 from 32% in fiscal 2014. 

The ratings agency said the airport has a comparatively low cost structure compared to other hub airports, even factoring in anticipated increases due to the capital plan. 

Finally, the airport has sound financial operations, satisfactory and stable debt service coverage ratios and very strong liquidity, Moody’s said. Moody’s forecasts total debt service coverage will slowly decline from 1.6X in fiscal 2025 and fiscal 2026 to 1.5X in fiscal 2029 and remain around that level until fiscal 2032.

For credit challenges, Moody’s said the facility had a large capital plan, a substantial part of which will be financed with debt. The airport has “concentration risk” associated with its extensive use by Delta and its affiliates. Finally, the airport has a weaker flow of funds provision compared to other similarly rated entities. 

As of June 30, 2024, the airport had about $1.8 billion in senior lien general airport revenue bonds, the same credit on offer next week, $1.4 billion in passenger facility charge and subordinate-lien hybrid bonds and $727 million in commercial paper notes. The airport’s adjusted net pension liability was about $355 million.

The airport has a negative environmental score because it is exposed to risk from potential policies to transition away from carbon dioxide producing modes of transport, Moody’s said.

KBRA pointed to similar factors as Moody’s. Additionally, it said the area’s economic diversity was a strength. Both agencies said the airport’s skillful leadership was a plus. 

KBRA said the airport’s high, though moderating, dependence on connecting traffic was a credit negative.

S&P pointed to similar factors as the other two agencies. It noted, “Management’s willingness to adjust revenue, expenses and capital spending to protect sound financial operations.”

The bonds are scheduled to price Tuesday and be given a written award on Wednesday. The closing is expected to be Sept. 24. 

Also underwriting the deal are TD Securities, Drexel Hamilton, Jefferies, Wells Fargo Securities, Estrada Hinojosa, Stern Brothers & Co. and Harvestons Securities.

Hunton Andrews Kurth and Johnson & Freeman are the co-bond counsel on the deal.