WASHINGTON - The Metropolitan Washington Airports Authority plans to issue $250 million of airport system revenue bonds on Wednesday in a negotiated deal to refund about $222 million of its outstanding commercial paper.
Lynn Hampton, the MWAA's chief financial officer, said the revenue bonds will refund all $60 million of its Series One commercial paper notes and about $162 million of its $200 million of Series Two commercial paper notes outstanding.
She said a portion will be set aside because the MWAA is applying for a grant of about $20 million for a land purchase at Dulles International Airport, which the authority operates along with Ronald Reagan National Airport. The land purchase is part of their capital construction plan. The remaining amounts are taxable paper, which Hampton said the authority will wait to refund through a taxable issue.
The remainder of the bonds will go to the authority's debt service fund and pay debt issuance costs for the Series 2008 deal.
Moody's Investors Service rates the Series 2008A bonds Aa3. Standard and Poor's rates the bonds AA-minus, and Fitch Ratings assigns the deal a AA. Moody's Investors Service give the deal a positive outlook, while Standard and Poor's and Fitch give it a stable outlook. The ratings are the same from all three agencies for the MWAAs $3.9 billion of outstanding airport system revenue bonds.
"A lot is going on in this industry right now," Hampton said, adding that the agencies affirmed the ratings recently because of the MWAA's "fairly conservative" management practices.
DEPFA First Albany Securities LLC and P.G. Corbin & Co. are co-financial advisers on the deal. Hogan & Hartson LLP and Lewis, Munday, Harrell & Chambliss are co-bond counsel.
Lead underwriter on the deal is Morgan Stanley. Siebert Brandford Shank & Co., Banc of America Securities LLC, Lehman Brothers, Citi, Loop Capital Markets Inc., Morgan Keegan & Co., Ferris Baker Watts Inc., and Merrill Lynch & Co. are co-underwriters.
While the authority's traffic and revenues grew steadily in fiscal 2007, and system-wide enplanements were up 4.5% in fiscal 2007 compared to fiscal 2006, enplanements for January 2008 at Dulles showed a 6% decline compared to January 2007, which Hampton said reflects the national problems of high fuel costs that are affecting airports.
The MWAA had budgeted an additional $3.3 billion of bonds to complete its $7.1 billion capital construction program, but "in light of the aviation activity, it's likely that we will reduce or defer some of the future capital for the program," Hampton said.
Enplanement growth at National has remained flat, Moody's said. Income from operations increased 10.2% through October 30, 2007, compared to the same period in 2006, in large part due to strong growth in concessions revenues at both Dulles and National, according to Moody's.
Given the high fuel costs that are plaguing aviation activity nationwide, Hampton said the MWAA is in comparably good standing and should maintain its ratings.
Debt manager Valerie O'Hara said the authority may issue $150 million of Series 2008B of revenue bonds in the next two weeks, but details were not available, as officials were uncertain of whether the deal would happen. O'Hara said the authority will issue at least $175 million of revenue bonds in September.
Most recently, the MWAA converted $141 million of its auction-rate securities to variable-rate demand obligations in mid-March, when it was hit with high interest rates during the ARS market's collapse.
