What is a characteristic of hybrid bonds issued by airport operators?

Hybrid bonds issued by airport operators are designed to leverage multiple sources of revenue to enhance credit quality and investor appeal. Typically, these bonds are secured by a combination of airport-generated revenues, such as revenues from Passenger Facility Charges (PFC), Customer Facility Charges (CFC), or other facility-related incomes. This characteristic allows airport operators to tap into various streams of income, providing a diversified revenue base that can support the repayment of bondholders.

The use of PFCs and CFCs, in particular, is significant because they are specifically levied for financing airport improvements and facility-related expenses, which can aid in financing capital projects and ensuring more stable cash flows. This multifaceted approach to securing financing through hybrid bonds makes them a critical tool for airport operators in managing their fiscal responsibilities and project funding effectively.