Denver P3 bonds ‘stable’

Ratings agency Fitch has announced that the bonds issued for the Denver International Airport Great Hall Project are rated ‘BBB’, with a stable outlook.

The $200m series 2017 revenue bonds are to be issued by the Wisconsin-based Public Finance Authority on behalf of Denver Great Hall, a joint venture that includes Ferrovial Airports (80% share) and Saunders/JLC (20% share).

Construction is estimated to cost $650m. Financing includes about $75.1m in total equity capital commitment, the issuance of long-term tax exempt amortizing bonds of approximately $200m and $479m in owner-funded construction progress payments.

The ratings agency states the expected rating to reflect the relatively straightforward nature of construction works for the Great Hall terminal refurbishment project. It also highlights a strong revenue counterparty in Denver airport for payments during both the construction and operational phases, limited demand risk and high expected coverage levels secured by combined cashflows of availability payments and net terminal concession revenues.

The rating also reflects the low cost volatility anticipated during for the operational period.Denver Airport's obligations for payments during construction and the operational phase will be behind both its senior and subordinate lien bond obligations pursuant to a well-defined payment mechanism.

Ferrovial intends to self-perform project operations, and given the limited operational and lifecycle requirements expected during the 30-year operating period, the project can sufficiently withstand significant financial stresses to both costs and performance deductions.

The project will be constructed by an ‘experienced’ design-build joint venture team led by Ferrovial Agroman with Saunders Construction. Fitch notes Ferrovial's performance and credit is central to provide sufficient protection to manage various funding scenarios at different points of the construction phases.

Banks involved in the deal are understood to include Goldman Sachs, Bank of America and Citi.