What does airport financing look like?

Sorry if this question is dumb.

What does a capital structure of an airport look like? I read something on wso that airports were 100% or mostly funded by debt and didn't really know how to attest to that. Where high interest would be supplemented by high cash flows. It sounds like the main way of valuing it would be through a DCF where the after-tax Cost of Debt would be the discount rate (since equity funding was negligible). Public Comps and PTs I imagine are a bit whacky in this space.

Also if an airport has a very high debt to equity ratio, wouldn't that make airport ownership susceptible of being bought at a discount in relation to debt?

Comments (6)

Sep 20, 2021 - 5:17pm

This is really more of a Pubfin questions.  I mean sure you may have the infra debt funds look at his, but in reality most airports in the US (correct me if I'm wrong) are state backed.  Thus the structuring would fall under Munis.  You buyers for Munis are typically larger funds and wealthy individuals (typically smaller deals).  So what you are going to be looking at are revenue bonds and how they are structure. 

Sep 20, 2021 - 3:17pm

Are you talking us/Canadian publically owned airports or European/Australian types very different cap structure and ownership dynamics....

  • Intern in IB - Gen
Sep 20, 2021 - 4:51pm

US/Canada, although I didn't realize that Eur/Aus would so different. Don't mean to draw it out but could you elaborate? 

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Sep 20, 2021 - 10:09pm

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