BRADENTON, Fla. – Orlando International Airport officials return to the bond market with their largest deal ever and an offering they hope will appeal to retail, institutional and green-minded investors.

On Tuesday, the Greater Orlando Aviation Authority plans to price $950 million of subordinated airport facilities revenue bonds subject to the alternative minimum tax. GOAA operates the airport.

A $2.15 billion south terminal complex is being constructed Orlando International Airport to meet passenger demand.
A $2.15 billion south terminal complex is being constructed Orlando International Airport to meet passenger demand. Greater Orlando Aviation Authority

The deal has been accelerated from its planned sale date in early September because of market conditions and the upcoming Labor Day holiday, according to Chief Financial Officer Kathleen Sharman.

“Airport transactions that have come to the market since the summer have met with good demand and we hope that timing will work for us as well,” Sharman said. Pre-marketing takes place Monday.

The deal, which carries S&P Global Ratings’ first U.S. airport authority “Green Evaluation” score, is expected to be structured with serial maturities between 2023 and 2037, and term bonds in 2042, 2047 and 2052.

“The structure we designed is to attract both retail and institutional investors,” Sharman said, adding that priority will be given to retail orders during pricing on Tuesday.

Bond proceeds will partly finance phase 1 of GOAA’s new, three-story south terminal that will have 16 aircraft gates at central Florida's busy Orlando International Airport.

About 12% of the deal will refinance lines of credit that paid for preliminary costs associated with the south terminal and the remainder will pay for upcoming construction, capitalized interest, issuance costs, and a deposit into a pooled subordinated reserve account.

The $2.15 billion terminal complex will be served by an automated people mover and will eventually be part of an intermodal complex that will include local and regional passenger rail service.

Fitch Ratings and S&P assigned A-plus ratings to the subordinated revenue bonds, while an A1 was assigned by Moody’s Investors Service.

S&P and Fitch also affirmed their AA-minus ratings on $933 billion in outstanding senior-lien bonds. The senior bonds are rated Aa3 by Moody’s.

All three have stable outlooks.

Buildings in the south terminal complex will be constructed with Leadership in Energy and Environmental Design Version 4 standards, under LEED’s building design and construction rating system.

S&P said in a new report released Thursday that GOAA’s transaction achieved a Green Evaluation score of E1/78 in its data-driven evaluation that analyzed and estimated the project’s environmental impact and/or resilience level. E1 is the highest score on the S&P scale; E4 is the lowest.

While the bonds pricing Tuesday are not labeled green bonds, the full amount of bond proceeds will be applied to support the development of green buildings that were considered in the scoring evaluation, S&P said.

“In our view, the project’s expected reductions in water and energy usage compared to building projects that are not designed and constructed according to similar environmental standards place this project towards the top end of scores for Green Buildings,” said analyst Andrew Bredeson.

Kathleen Sharman, chief financial officer, Greater Orlando Aviation Authority
Kathleen Sharman

Sharman said sustainability at Orlando International Airport is important, and GOAA applied for the S&P Green Evaluation to “give investors the knowledge they need.”

Information about the S&P score was not included in the preliminary official statement because Tuesday’s deal was accelerated, she said, “We were very pleased to receive the E1, their highest level.”

It’s too early to tell if the score will impact pricing or attract investors.

“For those who are interested, we hope it would have an impact,” said GOAA Public Affairs Director Carolyn Fennell. “To have an environmentally responsible design is important.”

GOAA’s total $3.6 billion capital improvement plan is driven by demand, with projects scheduled as passenger levels meet planned thresholds.

The airport’s 12-month rolling average passenger count is 43 million. Work on the south terminal project was triggered when passenger levels reached 38.5 million.

Expansion and renovation work is already underway in the existing north terminal, where has a design capacity of 24 million.

“We think it’s vital and important to meet the growth needs of the central Florida region,” Sharman said. “Over 68 million people visited the region in 2016.”

Raymond James & Associates, Frasca and Associates, and National Minority Consultants are co-financial advisors on Tuesday’s deal.

RBC Capital Markets will run the books for the 13-member syndicate, which includes Bank of America Merrill Lynch, Citi, Drexel Hamilton, Jefferies, JPMorgan, Loop Capital Markets, Morgan Stanley, PNC Capital Market, Ramirez & Co., Siebert Cisneros Shank & Co., Stifel, and Wells Fargo Securities.

Nabors Giblin & Nickerson and D. Seaton and Associates are co-bond counsel.

Greenburg Traurig and Ruye H. Hawkins PA are co-disclosure counsel.

Kutak Rock is underwriters’ counsel.

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