KBRA assigns a long-term rating of A to the City of Chicago, Illinois (the City) Chicago Midway International Airport (Midway or the Airport) Senior Lien Revenue and Revenue Refunding Bonds Series 2025A (AMT) and Series 2025B (Non-AMT). KBRA concurrently affirms the long-term A rating on the City's outstanding parity Senior Lien Revenue Bonds issued for Midway. The Outlook is Stable.

Proceeds of the Series 2025 Bonds will finance elements of the Airport’s FY 2025 – FY 2029 capital improvement program, refinance outstanding bonds, fund the required deposit to the common debt service reserve fund, fund capitalized interest, and pay costs of issuance. The Series 2025 Bonds and outstanding parity Senior Lien Airport Revenue Bonds are secured by a pledge of revenues, payable after operation and maintenance expenses.

Key Credit Considerations

The rating actions reflect the following key credit considerations:

Credit Positives

• Strong, diverse, expansive air trade area supports origination and destination (O&D) passenger demand.
• Position as the fourth busiest airport in Southwest Airlines’ (Southwest) route system as measured by scheduled seat capacity.
• Residual airline use and lease agreement provides the basis for consistently sound financial operations.

Credit Challenges

• High level of carrier concentration, as Southwest accounts for nearly 90% of enplaned passenger activity.
• Historically narrow, but improving, debt service coverage as the Airport transitions to an increased rate covenant under revised 2023 Bond Indenture.
• Non-airline revenue performance ranks among the lowest of U.S. commercial airports.

Rating Sensitivities

For Upgrade

• Diversification of the carrier mix with concurrent enplanement growth.
• Successful transformation of terminal concessions, resulting in enhanced non-airline revenue support.

For Downgrade

• Significant reduction in Southwest's operations at Midway.

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: 1011484

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