Mon 06/06/2022 18:02 PM
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Relevant Document:
KBRA Report

Kroll Bond Rating Agency, or KBRA, issued a BBB- preliminary rating with a stable outlook to JFK New Terminal One’s proposed $6.63 billion financing for Phase A of the new terminal one, or NTO, redevelopment project at New York’s John F. Kennedy International Airport.

The JFK NTO consortium - which includes sponsors Ferrovial Airports, Carlyle, JLC Infrastructure and Ullico - will develop the $9.5 billion NTO project and operate it under a lease agreement with the Port Authority of New York and New Jersey, or PANYNJ. KBRA identifies Tishman Construction Corp. as the design-build contractor and says the construction term is estimated to take four years. New York state and PANYNJ officials announced a “restructured agreement” for the privately financed NTO project in December 2021.

KBRA said the proposed debt instruments to finance the project include the following:

  • $1.43 billion five-year floating-rate term loan facility;

  • $4.9 billion five-year floating-rate delayed-draw term loan facility;

  • $200 million five-year liquidity facility;

  • $50 million five-year working capital facility; and

  • $50 million five-year security deposit.


Positive credit considerations include JFK Airport being New York’s primary airport for international travel, accounting for 67% of total international traffic in New York. The design-build contract terms with Tishman are favorable because the project obligations and liabilities for construction are passed on to a third party for a fixed guaranteed maximum price, or GMP, according to the report. The agreement also has an incentive structure including an incentive bonus for construction contingency savings.

Another positive factor is that at an airport “constrained by wide-body gate capacity,” NTO will be the first terminal to increase its gate supply, with an initial phase focusing on replacement capacity and two additional phases providing additional gate capacity. “This will allow the project to increase its market share of international enplanements at JFK, and potentially lead to additional airlines looking for further capacity to move their operations to NTO,” KBRA states.

The ratings agency notes a “complex” construction schedule that relies on coordination with the PANYNJ, but calls Tishman “the ultimate DBcounterparty,” with “significant experience” in aviation projects and coordinating with the PANYNJ.

The NTO will have higher costs per enplanement than most other North American airports, but the increases will be in line with other JFK terminals and New York City airports, the report states.

KBRA says an upgrade is “unlikely at this time due to the extensive refinancing risk,” but added that once construction is complete and the term loan has been replaced with long-term financing, an upgrade could occur “if air traffic and revenue significantly exceed forecasts for an extended period.”

A downgrade could occur in the short term due to construction delays, and once the project is operational, if traffic or revenue is lower than expected or expenses significantly higher than forecast, KBRA added. The stable outlook “reflects JFK’s long history as the premier international gateway in the New York area.”

KBRA said it applied its project finance global rating methodology and ESG global rating methodology to evaluate the project, noting that the rating report is based on information as of May 25.
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