KBRA assigns a long-term rating of A, with a Stable Outlook to the City of Chicago – Chicago Midway Airport Senior Lien Airport Revenue and Revenue Refunding Bonds, Series 2023A (AMT); Senior Lien Airport Revenue Refunding Bonds, Series 2023B (Non-AMT); and Senior Lien Airport Revenue Refunding Bonds Series 2023C (AMT). Additionally, KBRA affirms the long-term rating of A, and Stable Outlook, on the Airport’s outstanding Second Lien Revenue Bonds.

Key Credit Considerations

The rating actions reflect the following key credit considerations:

Credit Positives

• Strong, diverse, expansive air trade area supports O&D activity
• Ranks as the third busiest airport in its dominant carrier’s (Southwest) route system as measured by enplanements and scheduled seat capacity
• Residual agreements obligate airlines, mainly Southwest, to absorb necessary rate and rental charge increases

Credit Challenges

• High level of carrier concentration, as Southwest accounts for nearly 90% of enplaned passenger activity
• Narrow debt service coverage, reflecting an adequate, although strengthened, rate covenant and residual airport use agreement
• 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 Airlines operations at Midway

To access rating and relevant documents, click here.

This Rating Press Release was revised on December 8, 2023 to reflect the City's decision to issue three series of senior lien bonds rather than two.

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) is a full-service credit rating agency 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 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.

Doc ID: 1002476

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