DALLAS — Aiming to recover some ground lost to the recession, the Arizona Sports Tourism Authority will shed variable-rate bonds and seek savings with a $177 million refunding of debt issued to finance the University of Phoenix Stadium.

The deal is expected to price next week.

The $455 million stadium in suburban Glendale was completed in 2006 to host the National Football League’s Arizona Cardinals. The stadium began hosting the Cardinals two years before the recession hit the state’s housing and tourism economy with a devastating double blow. Since then, interest rates have fallen to record lows, prompting a wave of refunding deals in the municipal market.

“Obviously, we’re taking advantage of what’s available in the capital markets, given what’s happened in the economy,” said ASTA chief financial officer Kevin Daniels. “We’re supported by tourism taxes and those have been down.”

ASTA, which had not released its preliminary official statement as of Monday, is working with RBC Capital Markets as lead manager, according to Thomson Reuters.

Next week’s issue will advance refund all of the authority’s senior-lien variable-rate bonds and a portion of its fixed-rate senior-lien bonds for annual debt savings, as well as pay swap termination fees estimated at about $9 million.

After the current offering, all of ASTA’s debt will be in fixed-rate mode. The authority refunded $90 million of subordinate-lien bonds in 2007.

The senior-lien bonds earned ratings of A1 from Moody’s Investors Service and A from Fitch Ratings, both with stable outlooks. Moody’s rates the $20 million of outstanding subordinate-lien bonds at A3, while Fitch rates them BBB-plus.

“After pledged revenue collections declined in prior years, performance has steadily improved over several consecutive months and we expect this trend to continue and gradually gain momentum over the near to medium term,” wrote Moody’s analyst Dan Steed.

The senior-lien bonds are secured by a first lien on tourism-related taxes, facility-related taxes and revenues.

Tourism tax revenues rose nearly 3% in fiscal 2011 from the year before, reversing a three-year slide that saw revenues drop by nearly 15%. The revenues provide about 60% of pledged revenues and include a car rental surcharge of 3.25% and a 1% tax imposed on each Maricopa County hotel stay.

From the 3.25% car rental surcharge, the first $2.50 of revenue goes to the Maricopa County Stadium District, an agency involved with spring training baseball facilities in the county. The two sources of revenue provide about 60% of total pledged revenues, though the revenue stream will be available only through April 2031.

The third major revenue source is state income tax on some Cardinals’ operations. That stream is available as long as debt remains outstanding and ensures sufficient money for debt service through final maturity in 2036.

Annual debt service drops from $24.2 million in 2031 to roughly $5.5 million from 2032 to 2036. ASTA reports a further expected increase of roughly 3.5% in tourism tax revenue for the fiscal year ending June 30, 2012.

Senior-lien bond debt-service coverage for fiscal 2013 is “sound” at 2.18 times, and subordinate-lien bond coverage is “satisfactory” at 1.29 times, according to Moody’s.

“While these coverage levels have declined from prior years, they remain consistent with the rating categories,” Steed wrote. “While further revenue erosion would drive subordinate-lien coverage closer to the 1.0x level, the authority retains some flexibility regarding annual distributions for other programs, including tourism-related functions.”

ASTA was created in 2000 by Senate Bill 1220 specifically to build the stadium for the Cardinals. Although the stadium was designed for football, the state called it a “multipurpose facility” to appeal to a broader array of voters. The authority is also involved in helping to finance spring training facilities for Major League Baseball.

The stadium went to Glendale in the West Valley region of metro Phoenix after efforts to build it in the East Valley were thwarted. Voters in Mesa sought to defeat any city efforts to support the stadium with infrastructure. The stadium is about 18 miles from central Phoenix.

The football stadium isn’t Glendale’s only foray into pro sports. The city also built the nearby $180 million Jobing.com arena for the Phoenix Coyotes of the National Hockey League, which opened in 2003.

The hockey arena, which is surrounded by retail and commercial development known as Westgate City Center, has become a financial burden for Glendale. For each of the past two seasons, the city paid $25 million of subsidies to keep the Coyotes playing there.

After failing during that time to find a buyer who would agree to keep the team in Glendale, the city is now working on a deal that could require at least $15 million in subsidies to a potential buyer, according to the Arizona Republic. The team is currently owned by the NHL, which bought it out of bankruptcy proceedings in 2009.

Glendale would pay the buyer of the team to manage the arena.

Bondholders on arena debt issued in 2003 don’t bear direct risk if the team leaves, because the bonds are backed by overall city sales tax revenue.

Glendale city manager Ed Beasley told the Republic that he expected to reach a deal by the end of the month with Greg Jamison, former president of the NHL’s San Jose Sharks.

The Coyotes are currently in the second round of the NHL playoffs after winning their first playoff series since arriving in Arizona in 1996.

While Glendale issued some general obligation debt for the University of Phoenix Stadium, the city bears much less risk on the NFL stadium, while enjoying the upside from sales tax revenue at NFL games, and the annual college football Fiesta Bowl.

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