If federal grants die, US airports are expected to rely on Muni’s debt

(Bloomberg) – US airports can resort to local bond markets for funding if federal funds for infrastructure are deployed as part of President Donald Trump’s push to approve government spending .

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Many facilities rely on federal grants to help fund renovations to aging infrastructure. Former President Joe Biden’s administration has allocated $14.5 billion over five years to modernize facilities and improve services amid the post-pandemic air travel boom. Such a drop in funding will force airports to force the gap itself, said Seth Lehman, senior director of the Global Infrastructure Group at Fitch Ratings.

“At some airports, low grants may mean that they often get debts to get the job done,” Lehman said.

According to data compiled by Bloomberg, the airport is already the leading issuer of municipal bonds, borrowing more than $2 billion in debt in 2024. Many of these sales came from the country’s largest hubs, including John F. Kennedy International Airport in New York City and Orlando International Airport in Florida.

However, Lehman said smaller facilities will be most affected by cuts in federal grants. He said facilities at tourist hotspots such as Key West, Florida and Myrtle Beach, South Carolina tend to rely on grants rather than debt, and could have to rethink their funding strategies. .

“If annual funding starts to drop, it puts more pressure on the airport,” he said. However, for the project you need, the airport can tap Muni market. “They know they can go to the capital market,” he said.

Lehman expects airport issues to range from $15 billion to $20 billion this year, especially as many borrowers have already sold bonds in 2024.

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