St. Louis saw strong demand among institutional buyers for its $30 million refunding last week of Lambert-St. Louis International Airport revenue bonds and achieved 4.6% in net present-value savings, city Comptroller Darlene Green said.
The finance team was able to lower yields by 13 to 15 basis points after the order period. The annual savings of about $1.5 million on the four-year bonds will be passed on to airlines through lower fees. The transaction also allowed the city to put an additional $2 million in a debt-service stabilization fund.
“This refinancing comes at a critical time for us as we have just completed a new five- year use and lease agreement with the airlines,” airport director Rhonda Hamm-Niebruegge said in a statement.
Ahead of the sale, Standard & Poor’s affirmed Lambert’s A-minus rating and negative outlook while Moody’s Investors Service affirmed its Baa1 rating and revised its outlook to stable from negative. The airport has $875 million of revenue debt.
Moody’s said the rating is based on a relatively stable origin-and-destination market concentrated in St. Louis, which has experienced significant transformation from a large hub for American Airlines to a regionally important O&D airport.
Other airlines have expanded, making up for some of the losses tied to American’s de-hubbing at Lambert.
The airport served 6.2 million passengers in fiscal 2010, marking a 20% decline over the last four years. Levels are expected to fall by about 2.1% in fiscal 2011 with growth expected to return the following year.