Finance: What is an Airport Revenue Bond?

What is an Airport Revenue Bond? An airport revenue bond is a muni bond that is issued and backed by an airport. The revenues from the airport pay for the outstanding debts associated with the issuance of the bonds.

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Transcript

00:24

frankly a lot of municipalities are going bankrupt particularly California

00:28

Stockton, San Bernardino even Orange counties in trouble so investors like

00:32

the safety of muni bonds with revenue attached and hence we have the airport [Airplane takes off from airport]

00:37

muni bond backed by revenues from the airport and the you know clever name

00:42

Well in this country a whole lot of airports were

00:45

initially built by the military so those were federal dollars put to work but

00:50

once the runway was in and there was access for parts and fuel while the

00:54

military generally lost interest oh and the effect that wars went away kinda [Tanks waiting]

00:59

helped so they didn't really need the fancy bathrooms with the

01:02

mother-of-pearl tile and sink knobs you know military people well they can use a [Military man peeing in the bushes]

01:08

tree or a bush most of the time they're tough so lots and lots of upgrades have

01:11

been needed for airports over the last decades especially with the advent and

01:15

popularity of private aviation...Airports issue muni bonds backed by their ability

01:21

to collect things like landing fees overnight motel airplane parking fees

01:26

premiums placed on jet fuel and a bunch of other revenue sources that small

01:30

airports lean on to pay for the upgrades they've installed. Sometimes the city [People walking through airport terminal]

01:35

issues the bond and the city owns the airport and at other times it's just the

01:39

airport itself but done as a muni bond so that the airport gets a really low

01:43

interest rates from the locals so yeah that's an airport revenue bond and it's [Man holding airport revenue bond on a plane]

01:47

a you know muni in the bank...