CHICAGO — The Minneapolis-St. Paul Metropolitan Airports Commission will enter the market later this month with a nearly $150 million mostly new-money sale of senior-lien revenue bonds as it seeks to take advantage of the federal alternative minimum tax holiday.

The deal is slated to sell during the final week of July. Barclays Capital is the book-running senior manager with Piper Jaffray & Co. serving as co-senior. Jefferies & Co. is financial adviser and Kutak Rock is bond counsel.

The sale includes $125 million of new money and $22 million that will refund commercial paper. Much of the funds will go to cover some new and routine terminal maintenance and rehabilitation projects at the Minneapolis-St. Paul International Airport’s Lindbergh Terminal.

Financing for the projects would have been subject to the AMT due to their private-activity status if not for the suspension of the tax for such debt in the federal stimulus program, said commission’s deputy director of finance Steve Busch.

“We thought it was an advantageous time to borrow given the low rates and we wanted to take advantage of the AMT holiday,” Busch said. The commission has no other refunding candidates that would qualify for non-AMT status. The AMT suspension continues through the end of the year, although an extension is pending in legislation before Congress.

Fitch Ratings affirmed the AA-minus and stable outlook on the sale and $723 million of outstanding senior bonds and the A rating on $694 million of subordinate bonds. The commission carries the same ratings from Standard & Poor’s, but it has not yet released a new report.

“Fitch believes that the commission’s current set of financial strengths and favorable cost profile, together with continued importance of Delta’s domestic hubbing operations at MSP are the key drivers to maintaining the ratings and stable outlook for the senior and subordinate lien bonds,” analysts wrote. “Further traffic losses … that lead to stresses to financial performance could pressure the ratings.”

The airport has maintained a strong financial profile even as it struggled with a decline in passengers. Connecting traffic has fallen by nearly 20% since 2005 and origination and destination traffic by 10 % due to the airline industry’s struggles and the recession’s impact on travel.

The airport averages about 15.6 million passenger enplanements annually. For the first four months of the year, traffic was down about 3% over last year, but Busch said preliminary estimates show travel picking up through the summer. Net 2009 net provided 2.12 times coverage of senior debt service and 1.51 times of junior bonds. Growth is expected to return next year with traffic rising by 3.3% and then 2.7% in 2012, according to estimates.

The dominance of Delta Air Lines, which acquired Northwest Airlines two years ago, remains a credit concern. The airline accounts for nearly 80% of passenger travel through the airport. 

The commission has almost finished its decade-long, $2.9 billion capital program. No additional debt is expected this year to finance a $523 million routine capital improvement program through 2016.

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