Airports across the United States have borrowed more than US$10bil from municipal-bond investors in the first six months of 2025, the largest first half since at least 1990. — Bloomberg
WASHINGTON: Surging construction costs and booming demand for flights are fuelling a rush of debt sales from US airports.
Airports across the United States have borrowed more than US$10bil from municipal-bond investors in the first six months of 2025, the largest first half since at least 1990.
The surge marks a 51% increase over last year’s volume and is outpacing the broader 20% uptick in state and local government bond sales, data showed.
The debt influx stems from a boom in post-pandemic air travel coupled with higher infrastructure costs, said Jason Appleson, head of municipal bonds at PGIM Fixed Income.
Inflation raised the expense of everything from materials to construction labour.
“Higher costs means more bonds to issue,” he said.
Salt Lake City (SLC) plans to tap the market this week to finance part of a major airport overhaul dubbed the “New SLC”.
The project, which essentially rebuilt everything except for the runways and taxiways, cost US$5.13bil, roughly 42% more than its US$3.6bil initial price tag, according to bond documents.
The design plan was amended to add extra gates at the request of Delta Air Lines Inc and other carriers.
“Within a couple years of construction, Delta approached the airport and decided if we were going to do this massive project we should do it right, so we amended the budget,” said Brian Butler, SLC’s chief financial officer, in an emailed statement.
The increases were also driven by higher cost of materials during the Covid-19 pandemic as well as “general increased construction costs in the SLC area”, bond documents stated.
Last week, Delta reported better-than-expected second quarter earnings and said travellers are coming back after tariffs fuelled economic concerns.
“It’s expensive to execute upon construction, new construction and upgrades and everything else that needs to happen across the country from an infrastructure standpoint,” said Jeremy Holtz, a portfolio manager for Income Research + Management. — Bloomberg
