BRADENTON, Fla. — Atlanta this week will bring to market nearly $600 million of bonds for Hartsfield-Jackson Atlanta International Airport, the facility’s first long-term fixed-rate financing in six years.
This will be the last bond issue for the new $1.5 billion Maynard H. Jackson Jr. International Terminal — part of the $6 billion capital improvement plan at the country’s busiest airport, which saw 88 million passengers last year.
The terminal project has also received grants, pay-as-you-go passenger facility charge revenue, and airport funds.
A commercial paper program has been used for interim funding and about $120 million of the CP will be refinanced in this week’s offering.
The deal is expected to be structured as $176.6 million of Series A senior revenue bonds and $413.6 million of Series B PFC and subordinate-lien revenue bonds, which is a “hybrid” security, according to the preliminary official statement.
The bonds are not subject to the alternative minimum tax.
They will be sold Tuesday to retail investors and Wednesday to institutional investors.
The Series A senior bonds are expected to be sold with serial maturities from 2014 to 2030 and two term bonds maturing in 2035 and 2040.
The Series B hybrid bonds mature serially between 2013 and 2026.
Wide interest in the deal is anticipated after many successful investor presentations in Atlanta and New York and a flood of taxable Build America Bonds expected to be sold, according to Atlanta chief financial officer Joya De Foor.
“Because of the huge supply over the next several weeks, it’s important to separate yourself from the competition in the quest for the lowest cost of funds,” De Foor said. “We have a large syndicate with a good balance of firms and a lot of selling power led by JP Morgan.”
De Foor pleased that the bonds won an upgrade from Moody’s Investors Service and said that few, if any, major airports have been upgraded recently.
Moody’s assigned an A1 rating to the senior and subordinate hybrid bonds, and upgraded to A1 from A2 the rating on $555 million of outstanding hybrid bonds.
Fitch Ratings assigned an A-plus to the senior bonds and an A to the hybrid bonds.
Both agencies said the outlook is stable and affirmed their respective ratings on about $1.4 billion of outstanding senior-lien bonds.
While a rating by Standard & Poor’s had not been released by Friday afternoon, the agency currently rates the senior-lien bonds A-plus and the subordinate bonds A with a stable outlook.
Moody’s said its A1 rating for both series reflected strong coverage of annual debt service by pledged PFC revenues as well as a subordinate lien on general airport revenues after the payment of senior bonds.
Atlanta owns and operates the airport and has undertaken one of the largest airport renovation projects in the country.
A major part of the capital program is the new international terminal, which is 67% complete and on budget, according to the POS.
By July, $1.1 billion of the total cost had been committed to purchase orders and contracts.
Upon completion in 2012, the 1.2 million-square-foot terminal will have five levels and 12 aircraft gates capable of accommodating wide-body aircraft in international or domestic service in addition to 28 existing wide-body gates at the current international concourse.
Terminal roads and parking structures are expected to be completed in December 2011.
Frasca & Associates LLC is financial adviser for the city’s Department of Aviation.
First Southwest Co. and DOBBS, RAM & Co. are co-financial advisers for the city.
JPMorgan is the book-runner and co-senior manager with Jackson Securities.
Co-managers are Bank of America Merrill Lynch, Grigsby & Associates, Jefferies & Co., M.R. Beal & Co., Ramirez & Co., and Wells Fargo Securities.
Hunton & Williams and Hollowell Foster & Herring PC are co-bond counsel.
Greenberg Traurig LLP and Riddle and Schwartz LLC are co-disclosure counsel.
Bryan Cave LLP and Haley & McKee LLC are underwriters’ counsel.