KBRA Assigns AA- Rating to Lee County, FL Airport Revenue Bonds Series 2026; Affirms Outstanding Bonds at AA-; Outlook is Stable

NEW YORK–(BUSINESS WIRE)–#creditratingagency–KBRA assigns a long-term rating of AA- to Lee County, Florida’s (the County) Aviation Revenue Bonds Series 2026A-1 (AMT); Airport Revenue Bonds Series 2026A-2 (Put Bonds) (AMT); and Airport Revenue and Refunding Bonds Series 2026B (Non-AMT) issued for Southwest Florida International Airport (the Airport). Concurrently, KBRA affirms the AA- long-term rating on the County’s approximately $862.8 million outstanding Aviation Revenue Bonds. The Outlook is Stable.

The Airport is owned by Lee County (the County) and operated by the Lee County Port Authority (the Authority). The County’s Airport Revenue Bonds are secured by and payable from a pledge of net revenues generated by the Airport System and certain funds and accounts held under the Bond Resolution. The County’s Series 2021A, Series 2021B, Series 2024, and a portion of the Series 2026B Bonds benefit from a specific pledge of Passenger Facility Charge (PFC) revenues which are otherwise excluded from Net Revenues. The Airport is the only member of the Airport System. Airport System finances are maintained as an enterprise fund of the County.

Key Credit Considerations

The rating actions reflect the following key credit considerations:

Credit Positives

• Diversifying, leisure-oriented service area which generates robust origination and destination (O&D) passenger traffic.
• Sound operating performance, liquidity, and debt service coverage, fueled by healthy non-airline revenues.

Credit Challenges

• Significant, largely debt funded $2.3 billion capital improvement program (CIP), which will materially elevate debt service and operating costs.
• Material increase in costs and lengthened construction schedule associated with redesign of Phase 1 of the Terminal Expansion Program.
• On-going vulnerability of the air trade area to national economic cycles.

Rating Sensitivities

For Upgrade

• Continued growth in non-airline revenues resulting in higher than anticipated debt service coverage and liquidity levels.
• Settlement or litigation outcome regarding Phase 1 design issues resulting in meaningful offset to resultant cost increases and reduced borrowing.

For Downgrade

• Additional, material increase in the scope and cost of the CIP resulting in debt issuance beyond what is currently contemplated without an offsetting increase in revenues.
• While unlikely, a structural decline in air travel demand resulting materially reduced revenues and weakened financial flexibility.

To access ratings and relevant documents, click here.

Methodologies

• Public Finance: U.S. General Airport Revenue Bond Rating Methodology
• ESG Global Rating Methodology

Disclosures

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA), one of the major credit rating agencies (CRA), is a full-service CRA registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a Designated Rating Organization (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan’s Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.

Doc ID: 1013414

Contacts

Analytical Contacts

Peter Stettler, Senior Director (Lead Analyst)
+1 312-680-4170
peter.stettler@kbra.com

Mallory Yu, Senior Analyst
+1 646-731-1380
mallory.yu@kbra.com

Douglas Kilcommons, Managing Director (Rating Committee Chair)
+1 646-731-3341
douglas.kilcommons@kbra.com

Business Development Contacts

William Baneky, Managing Director
+1 646-731-2409
william.baneky@kbra.com

James Kissane, Senior Director
+1 646-731-2380
james.kissane@kbra.com