This article examines six bond structures that are reshaping airport and municipal revenue bond finance in 2024–2026: VRDBs, mandatory tender (put) bonds, tender offers, AMT/TCJA refunding dynamics, forward delivery bonds, and direct placements. The unifying theme is the elimination of tax-exempt advance refunding by the TCJA in 2018 — a prohibition the OBBBA (2025) did not restore — which continues to force issuers toward structures carrying 10–100 basis point cost penalties vs. the pre-2018 toolkit. All data is sourced from publicly available MSRB EMMA filings, Official Statements, rating agency reports, MSRB market data, and Bond Buyer coverage. No confidential or proprietary data from DWU client engagements was used.
Executive Summary
Six structures are central to airport revenue bond finance in 2024–2026. Variable rate demand bonds are resurging — rising from 4% to 10% of total municipal par issuance between 2022 and 2024 — driven by favorable SIFMA index levels (1.31% as of January 2026) and increased bank participation in 2024–2025 MSRB dealer transactions. Mandatory tender (put) bonds have emerged as the premier workaround for the advance refunding prohibition, with DFW issuing $300 million in September 2025 (Bond Buyer Southwest Deal of the Year) and RSW issuing $169.8 million in February 2026. Tender offers were used in multiple large-hub airport transactions in 2024 (MSRB). Forward delivery bonds serve as a rate-lock mechanism. The AMT/TCJA dynamic crystallized when the One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, made TCJA AMT thresholds permanent but did not restore advance refunding. And bank direct placements declined 45% in 2024 (MSRB).
The municipal market recorded record issuance of $580.4 billion in 2025, a 13% increase from 2024's $545 billion record, with airport revenue bonds achieving their largest first half since 2008 (MSRB data).
1. Variable Rate Demand Bonds — The Resurgence
Market Volume and Trend
After collapsing from 28% of total municipal par issuance in 2008 to a floor of 4% in 2015, 2020, and 2021, variable rate securities rose from 4% to 10% of par issuance between 2022 and 2024. The MSRB's September 2025 Primary Market study (covering 2005–2024 data) documents the trend: variable rate securities rose from 4% of new issuance par in 2022 to 10% of total new issuance par in 2024 — the highest share since 2017. Bond Buyer flagged this inflection with two notable headlines: “Variable-Rate Debt Rises to Highest Level Since 2017” (February 20, 2024) and “VRDOs Tick Up in 1H 2024” (August 19, 2024).
The absolute size of the outstanding VRDO market compressed after 2008. From a pre-crisis peak of roughly $222 billion outstanding in early 2014, the market contracted to approximately $72 billion by year-end 2022 — a 67.5% decline driven by bank deleveraging, the withdrawal of LOC providers, and issuer flight to fixed-rate debt.
SIFMA Index Environment
The SIFMA Municipal Swap Index — the 7-day tax-exempt benchmark published weekly by Bloomberg — underwent a dramatic cycle that explains both why VRDBs became uneconomical in 2022–2023 and why they are attractive again in 2025–2026. The index spiked from 0.06% in January 2022 to 3.73% by December 2022 as the Federal Reserve tightened aggressively. At that level, the SIFMA/SOFR ratio compressed to 49%, meaning variable rate municipal borrowers were paying nearly the same rate as taxable short-term borrowers, eliminating the tax-exempt advantage. By January 21, 2026, SIFMA had fallen to 1.31%, with the SIFMA/SOFR ratio at 36% — the lowest ratio since pre-pandemic and a 123 basis point decline from January 2025 (2.54%) to January 2026 (1.31%). For any airport with outstanding variable rate debt or considering new VRDBs, the current SIFMA/SOFR ratio of 36% is the lowest since pre-pandemic levels.
Why Issuers Are Returning
Three concurrent drivers explain the resurgence. First, the Federal Reserve cut the federal funds rate three times in late 2024 and twice in 2025, directly lowering the cost of variable rate debt and making the historical 40–60% SIFMA/SOFR ratio economically attractive again. Second, the LOC market has stabilized — banks withdrew capacity from 2009 through 2016, but post-2020 bank balance sheets and post-pandemic municipal credit upgrades have brought key LOC providers (JPMorgan, Wells Fargo, Citibank, Barclays, Sumitomo Mitsui, and others) back to active participation in airport liquidity facility transactions. Third, the post-TCJA scarcity of advance refunding has pushed airports toward portfolio-level interest rate management, including strategic use of variable rate exposure to balance long-dated fixed-rate debt and reduce all-in average cost of capital.
What has structurally changed since 2008 is the bank regulatory environment: post-Dodd-Frank liquidity ratio requirements (LCR) mean banks price LOCs with greater discipline, and SBPAs (Standby Bond Purchase Agreements) have partly replaced traditional LOCs as the backstop mechanism. LOC/SBPA fees range from 40–80 basis points on the face amount annually. This must be priced into the all-in cost analysis — a discipline that was less rigorous pre-crisis.
Airport-Specific Deal Examples
San Francisco International Airport (SFO) provides a recent reference point. In 2018, the airport issued its Second Series Variable Rate Revenue Bonds, Series 2018B ($150 million) and Series 2018C ($134.9 million), backed by LOCs from Barclays Bank PLC (Series 2018B) and Sumitomo Mitsui Banking Corp. (Series 2018C). S&P rated the bonds AA+/A-1 on a joint-criteria basis, with a SPUR (S&P Underlying Rating) of A+/Stable — reflecting that the rating in covered mode was driven by the bank credit, while the SPUR was the airport's own credit. The two-tier rating structure (enhanced + underlying) is used in LOC-backed VRDB transactions.
Denver International Airport (DEN) has maintained a meaningful variable rate component within its predominantly fixed-rate $6.95 billion portfolio. As of December 31, 2024, DEN reported LOCs from Truist (Baa1/A-/A) covering $95.165 million related to 2002C, 2008B, 2009C, and 2021A-B variable rate bonds, with terms expiring in 2028. DEN's portfolio management approach — maintaining 1.4% variable rate exposure within a $6.95 billion portfolio — is consistent with GFOA's 10–15% ceiling guidance.
Interaction with Airport AUAs and Rate Covenants
For airports operating under residual or hybrid airline use agreements, variable rate debt creates ratemaking complexity: the actual debt service cost for the coming year is uncertain until SIFMA resets occur throughout the year. Residual airports that pass all debt service costs through to signatory airlines must either use the budgeted (estimated) rate in the annual rate calculation or use a hedging mechanism. Among large-hub airports with VRDB exposure, interest rate caps or swaps are used to set a ceiling on variable rate expense, which is then disclosed to airlines during the annual rate-setting cycle. GFOA’s Advisory “Using Variable Rate Debt Instruments” (updated guidance 2021) recommends that issuers limit variable rate exposure to a defined percentage of total debt, maintain LOC/SBPA coverage, and disclose total exposure in continuing disclosure. Moody's and S&P rate variable rate debt exposure above 15–20% of total debt as a credit factor, particularly absent hedges.
Rating Agency Perspective
Moody's, S&P, and Fitch all evaluate variable rate exposure as a liquidity risk factor. For LOC/SBPA-backed VRDBs, the rating on the bonds in “covered mode” is governed by the bank's credit; if the LOC expires or is not renewed, a mandatory tender occurs — which at scale could constitute a liquidity event for the issuer. S&P's joint criteria framework requires issuers to demonstrate that the airport's own underlying credit (SPUR) is sufficient to absorb a put event without triggering rating downgrade spirals. KBRA has not historically assigned separate criteria for VRDB structures at airports, instead incorporating variable rate exposure into its overall liquidity analysis.
| Parameter | Pre-2009 | Post-2022 Resurgence |
|---|---|---|
| Variable rate % of muni issuance par | 11–28% | 4% (2021) → 10% (2024) |
| SIFMA Index range | 3–5% typical | 1.31% (Jan 2026) |
| LOC market depth | Very broad | Narrower but stabilized |
| LOC fee range (MSRB) | 20–40 bps | 40–80 bps |
| Airport variable rate ceiling (GFOA guidance) | 15–20% of debt | 10–15% (2021 updated guidance, vs. 15–20% pre-2009) |
2. Put Bonds (Mandatory Tender Bonds)
Mechanics
A “put bond” or “mandatory tender bond” is a fixed-coupon bond with an embedded issuer option to compel investors to tender their bonds at par on a specified date (the “put date” or “mandatory tender date”), at which point the issuer either remarkets, refunds, or pays off the bonds. The mechanism differs fundamentally from a traditional callable bond, where the issuer has an optional right to redeem at par or a premium; and from a VRDB, where the investor has the right to demand par on short notice. The put bond is issuer-controlled: the issuer knows exactly when the put will occur, can plan for refinancing, and in many structures includes a “soft put” provision that allows outstanding bonds to remain outstanding at a stepped-up coupon rather than triggering an event of default if the issuer cannot tender.
The economic rationale is straightforward: by issuing a bond with a stated 30-year maturity but a mandatory tender in year 4–7, the issuer can price the bonds off the shorter-dated (and lower) point on the yield curve, locking in cost savings relative to a comparable fixed-rate 30-year bond. The savings are captured only for the period between issuance and the put date. After the put date, the issuer is exposed to prevailing market rates — the central risk of the structure.
| Feature | Fixed-Rate Callable | VRDB (Weekly Mode) | Mandatory Tender (Put Bond) |
|---|---|---|---|
| Interest rate | Fixed for life | Resets weekly (SIFMA) | Fixed to put date; reset at tender |
| Issuer control of call/put | Optional, premium possible | No control; investor demands | Mandatory; issuer sets put date |
| LOC/SBPA required? | No | Yes (typically) | No |
| Remarketing agent (ongoing)? | No | Yes | No (only at put date) |
| Investor protection if issuer can’t refund | Par call exists | Par tender at any time | Soft put: stepped coupon |
| Rating treatment | Issuer credit only | Enhanced (joint criteria) | Issuer credit only |
| Advance refunding workaround? | No | No | Yes — synthetic call at put date |
Recent Airport Deal Examples
DFW Airport — September 2025 ($1.967B — Bond Buyer 2025 Southwest Deal of the Year)
DFW’s September 2025 transaction was the largest single airport revenue bond issuance in the 2024–2026 period and included $300 million in mandatory tender bonds (Series 2025A-2, AMT) — the largest single airport put bond offering on record. The deal structure split the $1.967 billion into $1.38+ billion in conventional fixed-rate revenue bonds and $300 million in mandatory tender bonds, with tender dates set at November 1, 2029 and November 1, 2032 (split across two tranches for duration differentiation). The bonds were priced at the short (4-year and 7-year) end of the yield curve, with the DFW Official Statement disclosing estimated $27 million in interest savings relative to issuing comparable fixed-rate 30-year bonds. The deal saw $1.1 billion in orders — 3.7x oversubscribed —.
The soft put structure at DFW means that if DFW cannot refund or remarket at the put date, investors receive a stepped-up coupon and the bonds remain outstanding — preventing an event of default. Under DFW’s residual-basis airline agreement, debt service costs are passed through to airlines, making the variable reset risk at the put date manageable in a rate-covenant context.
Lee County Port Authority (RSW) — February 2026 ($681.3M — Series 2026A-2 Put Bonds)
Lee County (on behalf of Southwest Florida International Airport) priced its $681.3 million Series 2026 bond transaction in late February 2026, including $169.8 million in AMT-eligible Series 2026A-2 Put Bonds with a mandatory tender date of October 2031 and a final maturity of 2056. The accompanying transaction included $464.1 million in Series 2026A-1 conventional AMT bonds (serial maturities 2034–2046, terms 2051/2056) and $47.3 million in non-AMT Series 2026B bonds (serials 2032–2036). Ratings: A2 (Moody’s) / A (Fitch) / AA- (KBRA) — all stable outlooks. KBRA noted that the $2.3 billion CIP would “materially elevate debt service and operating costs.” The split in rating — KBRA AA- vs. Moody’s A2 and Fitch A — highlights rating agency divergence in airport credits.
Issuer Pros and Cons
Advantages: Lower coupon in initial term vs. 30-year fixed (generally 15–30 basis points cheaper); no ongoing remarketing agent or LOC/SBPA required with lower transaction costs than VRDBs (no ongoing remarketing agent or LOC fees); soft put provision avoids event of default if market conditions at the tender date are adverse; functions as a synthetic call option without a call premium; no continuous liquidity management overhead; 3–7 year initial periods align well with airport capital program cadences.