SAN FRANCISCO - The Port of Portland, Oregon is planning to sell $95 million of revenue bonds next week to fund construction costs for projects at the Portland International Airport.
The deal is scheduled to price on Thursday, according to Steve Johnson, a spokesman for the port.
Bank of America Merrill Lynch will price the deal, which will be structured as serial bonds maturing in 2019 through 2034, and term bonds maturing in 2039 and 2044.
Orrick, Herrington & Sutcliffe LLP is bond counsel and Public Financial Management, Inc. and Backstrom McCarley Berry & Co., LLC are co-financial advisors.
Projects for PDX that will receive funding from the bond proceeds include replacement of its control system, redevelopment of concession facilities in the post-security area, relocation of security exit ways, improvement of roofing and skylights, and construction of public safety and security facilities, Johnson said.
PDX, located on 3,200 acres northeast of downtown Portland, is the 30th largest airport in the United States, according to the Federal Aviation Administration. The airport, considered a "large hub" by the FAA, has experienced steady growth in passenger traffic and has a strong market position, according to Standard & Poor's.
"Although the airport serves mostly short- to medium-haul markets, it exhibits many fundamental strengths of larger hubs, in our view: a strong, primarily origination and destination market, the absence of competing facilities, and solid historical debt service coverage," Standard & Poor's analysts said in a report released Monday.
The agency assigned the bonds a AA-minus rating and stable outlook.
The bonds, subject to the alternative minimum tax, will be secured by a prior pledge of airport revenues, on parity with about $406 million of its outstanding senior lien bonds. Of that, $102 million are variable rate bonds.
Next week's deal is part of the airport's seven-year capital improvement program, totaling $895 million. Standard & Poor's considers this amount "significant but manageable."
The airport plans to issue around $223 million in additional general airport revenue bonds. Other sources of funds for the program include federal and state grants totaling $120 million, passenger facility charge bonds totaling $141 million, and port funds totaling $320 million.
"The stable outlook reflects our anticipation that financial metrics will meet or exceed management's projections, that airline cost per enplanement will be manageable, that the liquidity position will remain at least strong, and that limited additional debt will be needed to fund the capital improvement program," Standard & Poor's said. "We would consider a significant decrease in traffic demand that puts pressure on these metrics as a credit risk."
