JFK Airport project to tap muni market for over US$6b

THE finance team behind the new terminal at New York’s John F Kennedy (JFK) International Airport expects to sell more than US$6 billion of municipal bonds in the coming years to help pay for the project. 

The group plans to issue taxable or tax-exempt debt in the US$4 trillion muni market to refinance a US$6.6 billion bank loan originally secured to fund the project, according to the project’s acting chief financial officer Marc McGrady. That loan, led by Mitsubishi UFJ Financial Group, closed on Jun 10 and will fund the first phase of the project, called New Terminal One (NTO). 

Construction of the US$9.5 billion project is expected to move forward this summer, New York Governor Kathy Hochul said in a statement earlier this month. 

“NTO’s plan is to refinance US$6.3 billion of senior bank debt through 2026 with multiple issuances of fixed-rate tax-exempt or taxable bonds,” McGrady said in a statement. “These issuances are expected to commence in mid-2024 but could occur earlier based on market conditions.”

McGrady said NTO will monitor market conditions to ensure that the project’s capital structure is optimised.

The 2.4 million-square-foot terminal will be the airport’s largest, nearly the same size as the 2 new terminals at LaGuardia Airport combined, the state said. Construction will take place in phases with the first one, including a new arrivals and departures hall plus a first set of new gates, expected to open in 2026.

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The project is the result of a public-private-partnership between the state, the Port Authority of New York and New Jersey plus infrastructure and financing firms. 

Ferrovial, the operator of London’s Heathrow Airport, reached a deal with the Carlyle Group to buy a stake in the entity developing the terminal. The Spanish infrastructure firm will acquire 96 per cent of the company through which the Carlyle Global Infrastructure Fund holds a 51 per cent stake in the concessionaire appointed to design, build and operate the terminal until 2060. BLOOMBERG