DALLAS - Shreveport, La., will further reduce its exposure to variable-rate debt this week with a negotiated sale of $24.7 million of fixed-rate airport revenue bonds to refund variable-rate bonds issued in fall 2007.
The bonds will be issued by the Louisiana Local Government Environmental Facilities and Community Development Authority, as were the 2007 bonds being refunded. Pricing is set for Thursday.
The sale will be in two parts, with $8.6 million to refund the bonds that financed general airport improvements, and $16.1 million to refund bonds supported by the authorized passenger facility charge of $4.50 per passenger levied at Shreveport Regional Airport.
While the $16.1 million series of refunding bonds will be supported by the passenger facility charge, the city said the bonds will also be supported by general fund revenues because the passenger facility charge will not be sufficient for debt service in 2009. The $8.6 million series will receive support from other airport system revenues, and general fund revenues, including fees and charges collected by the city. The bonds are not supported by property tax revenues.
The city's airport revenue debt is rated A by Standard & Poor's.
Underwriters include Morgan Keegan & Co. and Loop Capital Markets LLC.
Grigsby & Associates Inc. is Shreveport's financial adviser. Weems, Schimpf, Gilsoul, Haines, Landry & Carmouche PLAC, is bond counsel, with Washington & Wells serving as co-bond counsel.
Shreveport is located in northeast Louisiana, about 190 miles east of Dallas. Estimated population is approximately 200,000.
The 2007 airport refunding bonds were insured by CIFG Assurance North America Inc. When CIFG lost its Triple-A rating, the bonds became unmarketable and therefore reverted to JPMorgan Chase Bank under a standby bond purchase agreement. Outstanding debt and interest due on the Shreveport airport bonds as of Aug. 1 was $21.9 million.
"When CIFG was downgraded, those bonds became bank bonds with a due date," said Jerry Liang of Grigsby & Associates. "Right now, the city is paying a rate of prime-plus-one. The agreement is going to expire pretty soon, so we want to get the city into something more stable."
Shreveport will also use the proceeds from this week's bond sale to pay a swap termination fee of up to $3 million to Morgan Keegan Financial Products.
Earlier this year Shreveport refunded $42 million of variable-rate debt that financed a convention center hotel in the city, and $35 million of variable-rate debt that financed improvements to the city-owned Independence Stadium.
Liang said the only variable-rate debt now on the city's books is a 2005 issue by the utility system.
"Those bonds were insured by [Financial Security Assurance], and they are trading fairly well," he said. "We'll have to see how the market goes before looking at refunding them."
The Shreveport airport recorded its busiest year in 2000 with almost 380,000 passengers using the facility. The most recent low point was in 2002, with only 310,000 enplanements. The airport reported 324,000 enplanements in 2007.