KBRA assigns preliminary rating of BBB- to JFK NTO LLC’s $1.5 billion private facility revenue bonds.

KBRA assigns preliminary rating of BBB- to JFK NTO LLC’s $1.5 billion private facility revenue bonds.

New York, November 9, 2023(BUSINESS WIRE)– KBRA has assigned a preliminary rating of BBB- to JFK NTO Limited’s proposed US$1.5 billion (Series 2023) Special Facility Revenue Bonds for Phase A of the… Development of the first terminal, also called the new first terminal (NTO). At New York’s John F. Kennedy International Airport (JFK). The outlook is stable. The financing plan originally consisted of a single five-year term loan with two tranches totaling $6.33 billion, along with a $200 million liquidity facility, a $50 million working capital facility, and a $50 million security deposit facility borrowed by New York City Transportation. Development Corporation, a local development company, as the issuer of the conduit, and subsequently loaned to JFK NTO LLC (the borrower). The financing also includes $2.33 billion in sponsor equity (backed by letters of credit). Combined with other available sources, the Series 2023 Notes will be used to refinance approximately $1.6 billion of outstanding term loans and deferred drawn term loans, which were issued in 2022.

The design, construction, financing, operation and maintenance project for Terminal 1 – JFK’s only international terminal – is the largest terminal redevelopment effort within a broader redevelopment plan for the airport. The project operates under a lease agreement through December 30, 2060 with the Port Authority of New York and New Jersey (PANYNJ).

The design-build (DB) agreement with Tishman Construction Corporation of New York (DB contractor) has been executed for Phase A of the NTO, which includes the $5.7 billion redevelopment of the existing base building of Terminal 1, Terminal 2, the former Terminal 3 and the Green Garage. Locations. NTO Phase A will provide a 1.7 million square feet terminal with 13 wide call gates and one temporary wide gate. Under the scope of the agreement, Phase A of the NTO facility will be built on the sites of the former Building 2 and the former Building 3. The construction plan is designed to minimize disruption and allow the existing Building 1 to continue operating until Phase A is completed in 2026.

The Borrower will manage the NTO in cooperation with Ferrovial Airports US Operation and Management Services LLC (Ferrovial Airports), which will provide consulting, technical services and employee training before and after the beneficial occupancy date (DBO). The project is being led by a consortium of Ferrovial, Carlyle, JLC Infrastructure and Ullico (collectively the Sponsors).

Key credit considerations

(+) Construction work is underway

The Notice to Proceed (NTP) was officially issued on June 10, 2022. Since then, the design has progressed as planned. PANYNJ issued a letter on April 20, 2023, allowing the Comprehensive Final Design (CFD) process to be closed and Advanced Final Design (AFD) to proceed. The DB contractor was able to mitigate non-critical delays that occurred with respect to the foundation work due to increased utility relocation by rearranging specific items and extended work shifts. This approach gave comfort to the Lead Technical Advisor (LTA) that the Phase A DBO date of 1 June 2026, would remain unchanged from September 2023.

(+) Drive construction and progress toward budget

Total NTO project costs remain unchanged from the original budget of $5.739 billion. As of end-September 2023, the project’s overall progress of 28.1%, based on disbursements made, falls between the early forecast of 31% and the late forecast of 26%. Since the release of the NTP program, the database contract amount has increased to $3.954 billion from its original budget of $3.927 billion due to change orders and the use of the developer’s contractor relocation allowance. These increases have been funded from various allowances and contingencies available. There are a number of approved uses of project contingency; To date, this total approved use amounts to $105.4 million, or 24% of the total project allocation. There are approximately $630 million of combined contingency allocations remaining available to the database contractor.

(+) The main international gateway to New York

JFK is New York’s primary airport for international travel, accounting for 67% of New York’s total international traffic.

(+) Guaranteed maximum price contract

There is a DB contract with Tishman. KBRA views the terms of the contract favorably, transferring project obligations and construction responsibilities to a third party in exchange for a fixed, guaranteed maximum price (GMP). The agreement has an incentive structure, including a bonus for emergency savings on construction work, which we view positively, as this ensures incentive alignment.

(+) Experienced participants

While the construction schedule is complex and dependent on interactions with PANYNJ, Tishman is the counterparty in the database, with significant experience in aviation projects and coordination with PANYNJ.

Classification sensitivities

An upgrade is unlikely to occur at this time due to extensive refinancing risks. Once construction is complete and the term loan is replaced with long-term financing, an upgrade can occur if air traffic and revenues significantly exceed expectations for an extended period.

In the short term, a reduction could occur due to delays in construction work. Once a project is up and running, it is possible to downgrade the rating if traffic or revenue is lower than expected or if operating expenses are significantly higher than expected.

ESG Considerations

Environmental factors

The database contractor intends to design and build the project to achieve LEED Silver certification and provide the information necessary to achieve as many additional credits for LEED Gold certification as can reasonably be achieved without additional design changes or any schedule/cost impacts.

Social factors

NTO’s Environmental, Social and Governance (ESG) goals include a target of 30% of minority- or women-owned business enterprises participating in all disciplines and stages through various professional services and other contracted functions.

During construction, the station will create more than 10,000 jobs, including more than 6,000 sustainable construction jobs for families. Recruitment is expected to focus on the surrounding communities.

Governance factors

The new terminal one is an international airport terminal. As such, government agencies dealing with immigration, customs and security have specific requirements that must be taken into consideration. Ferrovial’s American employees have extensive experience in dealing with various government agencies to ensure their involvement from the beginning of the project.

The buffer structure of this project financing transaction helps mitigate governance risks. Separately, cybersecurity is a growing concern for energy and infrastructure projects around the world. A cybersecurity attack can not only temporarily halt operations, but will also have a long-term impact on the issuer’s management procedures.

Evaluation justifications

Under KBRA’s rating status, we expect the project to have average debt service coverage ratios (DSCR) of 1.84x over the lease term, and DCF/DCF ratios above 1x at each planned refinancing point. The rating and stable outlook reflect the contractual structure of the project, the experience of the database contractor, and the significant liquidity of payment and performance bonds during the design and construction period.

Once the terminal is operational, the project debt will be paid primarily through aviation revenue consisting of facility fees expressed as costs per aircraft (CPE) by the airlines used.


The stable outlook reflects JFK’s long history as the premier international gateway in the New York area. NTO will provide additional wide-gate access and services to international airlines operating at JFK, including those displaced following the closure of the current Terminal 1. An upgrade is unlikely in the short term given construction and refinancing risks. Once construction is completed and long-term financing is in place, an upgrade can take place if traffic and revenue significantly exceed expectations. Reductions can occur due to significant construction delays or traffic volumes that are always lower than KBRA forecasts.

To access the classification and related documents, click here.

Click here to view the article.


Project Finance and Infrastructure: Global Project Finance Ranking Methodology

Global ESG rating methodology


More information on key credit considerations, sensitivity analyzes that take into account factors that can affect these credit ratings and how they could lead to a rating upgrade or downgrade, and ESG factors (where they are a key driver behind a change in credit rating or rating outlook) can Find them in the full evaluation report referenced above.

A description of all material sources that have been used to prepare the credit rating and information on the methodology(ies) (including any material models and sensitivity analyzes of the relevant key rating assumptions, as applicable) used in determining the credit rating is provided. In the information disclosure form(s) found here.

Information about the meaning of each rating category can be found here.

Further disclosures regarding this rating action are available in the information disclosure form(s) referenced above. Additional information regarding KBRA’s policies, methodologies, rating scales and disclosures is available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the US 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, the KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a credit rating provider.

View source version on Businesswire.com: https://www.businesswire.com/news/home/20231109707276/en/


Analytical communications

Aditi Amin, Senior Manager (Principal Analyst)
+1 646-731-2332 adeeti.amin@kbra.com

Andrew Giudici, Global Head of Corporate and Projects
Infrastructure Finance (Chairman of the Classification Committee)
+1 646-731-2372 andrew.giudici@kbra.com

Maria de Urquijo, Senior Director
+1 646-731-3348

Business development communications

Rosemary Kelly, Senior General Manager, President
Structured finance and project finance
+1 646-731-2337

William Pankey, General Manager
+1 646-731-2409

You may also like...

Leave a Reply

Your email address will not be published. Required fields are marked *