By Doyinsola Oladipo
NEW YORK (Reuters) – The New Terminal One at New York’s John F. Kennedy International Airport said on Wednesday that it has issued $2 billion in bonds to begin refinancing $6.5 billion in bank loans raised last year during an extraordinary period of municipal bond market volatility.
JFK’s New Terminal One secured $9 billion in bank financing in 2022 in an unusual private-public transaction that was part of a broader $15 billion overhaul of JFK, one of the world’s busiest airports. Normally, airport construction is financed through the municipal market, but heavy volatility and illiquid markets prevented that in 2022.
The consortium of labor, operating, and financial partners said it will continue to refinance the largest bank loan ever committed to an airport terminal.
“NTO obviously had so much demand, they ended up taking more money. So they’ve now got not only a refinancing, but also got some money in the bank account to fund the construction instead of using bank debt,” said Richard Hoskins, Managing Director on Carlyle’s Infrastructure team.
The Series 2023 Special Facilities Revenue Bonds were oversubscribed by 7.7 times even after increasing the transaction by $500 million to $2 billion due to investor demand.
JFK’s New Terminal One secured $9 billion in financing in 2022. That included a $6.5 billion loan financed by over 40 institutions led by financial sponsors Carlyle, Ferrovial SA, JLC Infrastructure, and Ullico. It was the first time construction financing for a U.S. airport terminal was sold to a large number of banks.
Originally, the debt was meant to be divided between bank loans and municipal bonds. However, the deal had to be restructured due to volatility and illiquidity in the pandemic period in 2021 and again with the Russia invasion of Ukraine in 2022.
“If we’d been reliant purely on a muni bond issue we wouldn’t have been able to get to close, then the project gets delayed, the costs go up and the traveling public suffers,” said Hoskins.