The city of Fresno, Calif., is set to sell $33.1 million of airport revenue refunding bonds, issued on behalf of Fresno Yosemite International Airport.

Raymond James & Associates, Inc. plans to price the deal during the week of July 15.
The proceeds will be used to refund approximately $34.5 million of Series 2000A-B bonds. Net present value savings from the refunding is estimated at $3.7 million, or 10.5% of the refunded bonds.

Fitch Ratings has assigned the bonds a BBB rating and stable outlook, citing a small, economically vulnerable origination and destination base and revenues that are dependent on passenger volume.

The airport serves the passenger market of central California's San Joaquin Valley — a large, predominantly agricultural and generally low income, high unemployment region centered on Fresno.

"FYI's enplanement base is small, being 645,632 in fiscal year 2012, leaving it vulnerable to airline decisions to cut services," Fitch analysts said in a report.

Analysts also noted that the airport has a conservative debt structure, moderate leverage and improving liquidity, and modest infrastructure needs.

"The airport's positive growth forecasts combined with minimal airport funds needed for the capital program have the airport well positioned to further improve its balance sheet position," Fitch said.

Favorable enplanement trends supported by expanded seating capacity and an improvement in liquidity could lead to a higher rating.

The rating could be downgraded if volatility in enplanements leads to reduced operating revenues and strains on the airport's low liquidity base.

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