WASHINGTON - The Metropolitan Washington Airports Authority for months has been planning to bring $175 million of revenue bonds to market in a negotiated deal on Wednesday. But MWAA officials, like those of many other issuers, say the pricing of their deal will depend on what, if any, action Congress takes over the weekend to quell turmoil in the financial markets.
"At worst case, you pull a deal," said MWAA chief financial officer Lynn Hampton. "That's what a negotiated bond deal is for, so that you could in fact - if the market doesn't look right - pull it."
"If the market has settled down, we're going to be one of the first [deals] in, and we'll feel good about that because we are a strong credit and the market is looking for strong credits," Hampton said. "We're going to evaluate [tomorrow] and make a decision, has the market reacted to what's going on in Washington?"
At press time, members of Congress were trying to reach agreement on a rescue package that President Bush and the administration's financial leaders had warned was critical to avoiding market mayhem.
Meanwhile, Maryland Transportation Authority officials last week said that they, too, are monitoring the situation to decide when to bring $425 million of grant anticipation revenue vehicle bonds back to market after canceling the deal on Sept. 10 following news that the federal highway trust fund was poised to run out of money.
The Garvees were to be backed in part by money from the trust fund and MdTA officials feared that news of the trust fund's woes likely would have created an unfriendly market for the bonds.
Garvees are typically issued by state governments to finance the construction of transportation projects and are repaid with money from the federal highway trust fund.
Congress approved an $8 billion transfer of general funds to the highway trust fund on Sept. 11, just a few days before the credit crunch worsened for the municipal bond and other financial markets.
"At this point, we are still assessing the general condition of the financial markets, so we have not selected an alternate sale date," said Alison Williams, finance director of MdTA. "We're still kind of on the sidelines, as most muni issuers are. There aren't many bond sales moving ahead and it doesn't seem to even matter what the credit is. We're in the same boat as a lot of other issuers."
Williams said the postponed deal will not affect the progress of the InterCounty Connector project the Garvees were to help finance because it has "multiple funding sources." The ICC is a $2.4 billion, 18.8-mile toll-road project intended to provide an east-west traffic link between I-270 in Montgomery County and I-95 in Prince George's County.
If a bailout plan is approved, and the market reacts favorably to it, the MWAA's Series 2008B bonds, which are subject to the alternative minimum tax, will finance the agency's ongoing capital construction program, Hampton said.
Depfa First Albany Securities LLC and P.G. Corbin & Co. are co-financial advisers on the deal. Hogan & Hartson LLP and Lewis, Munday, Harrell & Chambliss are co-bond counsel.
Lead underwriters are Siebert Branford Shank & Co. and Morgan Stanley. Banc of America Securities, Citi, JPMorgan, Loop Capital Markets, Merrill Lynch & Co., and Morgan Keegan & Co. will also serve as underwriters.
Underwriters' counsel is Orrick, Herrington & Sutcliffe LLP and McKenzie & Associates PC.
The bonds are rated AA by Fitch Ratings and AA-minus by Standard & Poor's, both with a stable outlook. Moody's Investors Service rates the bonds Aa3 with a positive outlook.