Anatomy of a deal: Dallas Fort Worth Airport repeats as Southwest winner
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DFW
Dallas Fort Worth International Airport’s $1.967 billion revenue bond offering in September marked its biggest one-day debt sale and included bonds subject to a mandatory tender that locked in savings as it continued financing for a $12 billion capital program.
The issuance gave the airport its
“DFW is honored to have been selected again and we will make a pledge to continue to try to do innovative things so we can be recognized again in the future,” said the airport’s chief financial officer, Chris Poinsatte.
The sizable deal tested the market in advance of money the airport needs to raise for its capital program over the next three to four years, according to Russell Selkirk, DFW’s vice president of treasury management.
“So we proved, I think with this transaction, that there is support for getting deals with that magnitude done,” he said.
The mandatory tender bonds, which were split between 2029 and 2032 to provide duration differentiation for investors, was the largest such offering for an airport issuer and allowed DFW to lock in debt service savings in the initial four- and seven-year periods compared to issuing traditional fixed-rate bonds maturing in 2050, according to DFW’s nomination statement.
The airport estimates $56 million of present value savings over the life of the bonds based on an estimated 4% cost of borrowing after the respective tender dates.
“The Nov. 1, 2029 mandatory tender date was particularly appealing for DFW because projected new money financing needs are expected to decline after 2026, but significantly in 2029, and a modest amount of bonds — approximately $254 million — will be callable in 2029,” the statement said.
Under a soft put, there is a par call 90 days before the tender dates, allowing for a 180-day window to refinance the debt. Sinking funds in 2047-2050 reduced the amount of fixed-rate bonds amortizing in those years, while leveraging rates on the shorter end of the yield curve, the airport said.
The soft put structure avoids an event of default in case the bonds cannot be refinanced and conforms to DFW’s additional bonds test allowing the bonds to amortize. The mandatory tender did not require a liquidity facility or set aside of unrestricted cash, according to the statement, which noted strong investor demand for the $300 million of bonds, which had a 3.7 times subscription level.
The put bonds carried initial yields of 3.11% in 2029 and 3.65% in 2032.
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The deal was priced on Sept. 10, a day after a $1.012 billion, mostly AMT bond issue for Hartsfield-Jackson Atlanta International Airport.
“I believe having investors’ eyes on airport credit more broadly, as opposed to just for a single issuer, was really constructive for both us and for the Atlanta transaction,” Selkirk said.
“DFW has not had a lot of AMT paper in the market in some time, and so the size of this transaction was easy to get done because there was just a large bid in the market for that type of paper, given that people are looking to diversify their exposure,” he added.
The deal also benefited in terms of spillover demand from investors who were unable to obtain bonds from the Atlanta deal, according to Selkirk, who made his municipal finance debut with the offering after joining DFW in November 2024 from the corporate finance world.
The refunding component of DFW’s deal involved about $650 million of commercial paper the airport uses for interim financing, including around $200 million of extendable commercial paper.
The deal continued financing for a $12 billion capital program that includes a new Terminal F, a tear down and reconstruction of Terminal C, and the addition of 40 gates, bringing the total to more than 200, Poinsatte said.
In May, DFW and American Airlines, the airport’s dominant carrier, announced an agreement
A bigger Terminal F project led Moody’s Ratings to revise its outlook on DFW’s A1 rating to stable from positive, citing the additional debt required. The bonds were rated AA-minus by S&P Global Ratings and AA by KBRA both with stable outlooks.
More bond issuance is coming.
“Our debt before this deal was about $8 billion and our debt will be going up to $16 (billion) or $17 billion over this timeframe,” said Poinsatte, who plans to retire in March. “We’ll be in the market each of the next four or five years with $1 (billion) to $2 billion deals to finance that capital program.”
As the second busiest U.S. airport behind Atlanta’s in 2024, DFW’s passenger volume totaled 87.8 million, a 7.4% increase over 2023,
For the Series 2025A-1 and A-2 bonds, BofA Securities was the senior manager with JP Morgan as co-senior manager. Co-managers were Baird, Cabrera Capital Markets, Jefferies, PNC Capital Markets, Ramirez & Co, and RBC Capital Markets.
The fixed-rate bonds were structured with serial maturities from 2026 through 2046 and a term bond due in 2050.
The Series B deal, structured with serial maturities between 2026 and 2046 and term bonds due in 2050 and 2056, was led by Raymond James, with co-senior manager Loop Capital Markets and co-managers Blaylock Van and Mesirow Financial.
Co-bond counsel for all of the series were McCall, Parkhurst & Horton and West & Associates. Co-municipal advisors were Hilltop Securities and Estrada Hinojosa.
DFW bond issues won the Southwest regional award
