BRADENTON, Fla. — Miami-Dade County, Fla., hopes retail investors will take interest in a $790 million offering this week to refund bonds issued for Miami International Airport.
The deal is structured as $685 million of Series A bonds subject to the alternative minimum tax, and $105.5 million of Series B tax-exempt aviation revenue bonds.
It prices Wednesday for retail investors and Thursday for institutions.
The county expects to achieve present-value savings of $100 million or 14% on the 20-year Series A bonds, and $22 million or 19% on the 19-year Series B bonds.
The bonds are being sold for savings to reduce the average life of the debt by paying off principal faster, according to Anne Syrcle Lee, chief financial officer of the county’s aviation department.
“We, of course, are optimistic about retail participation,” she said.
The deal will be very well-received, according to Brendan Troy, managing director with Bank of America Merrill Lynch, which is serving as book-runner for the offering.
“Spreads might be a touch wider, but still strong demand” is expected, Troy said.
In addition to strong investor demand and historically low interest rates, the transaction may also benefit from positive rating agency action ahead of the sale, including an upgrade to A from A-minus by Standard & Poor’s.
“The upgrade reflects our view of MIA’s size and niche-market dominance as a U.S. gateway airport to Latin America and strong commitment to the Miami market from American Airlines Inc., favorable enplanement trends, little to no future debt needs with the completion of its large capital improvement program, and steady financial performance,” said Standard & Poor’s analyst Joseph Pezzimenti.
The bonds are rated A by Fitch Ratings and an equivalent A2 by Moody’s Investors Service.
All three agencies assign a stable outlook on the airport’s bonds, which represents a revision from negative by Fitch.
“The stable outlook reflects the improving performance of traffic activity at Miami International Airport as well as a stabilizing long-term cost profile to airlines that follows the completion phases of its $6.5 billion terminal redevelopment capital program,” said Fitch Ratings analyst Seth Lehman.
The agencies also recognized last year’s bankruptcy filing by American Airlines, the airport’s dominant carrier, which maintains a hub at MIA.
“American has continued to add capacity in Miami notwithstanding cuts at other airports,” according to Moody’s analyst Maria Matesanz.
In fiscal 2012, American added 1.2% in new seat capacity at Miami, but it cut 1.4% system-wide, she said.
First Southwest Co. and Frasca & Associates are co-financial advisors on this week’s offering.
