$856 MILLION OF DENVER AIRPORT REVENUE BONDS OVERSUBSCRIBED DURING PRICING
Denver Mayor Michael B. Hancock, Chief Financial Officer Cary Kennedy and Denver Manager of Aviation Kim Day announced today the highly successful sale of $856 million airport revenue bonds at a historically low interest rate of 3.69%. The bond sale provides $394 million of funding for Denver International Airport’s South Terminal Redevelopment Program and other capital improvement projects and $462 million of refunding bonds to reduce debt service costs for the airport.
“Denver International Airport is a key element in our plan to make a great city even greater,” said Mayor Michael B. Hancock. “The outstanding response to this sale is a testament to DIA as one of the most efficient, financially sound and beautiful airports in the world.”
The sale was conducted by a team of nine investment banks with Barclays serving as the lead firm for the transaction. Some of the maturities were significantly oversubscribed due to the strong demand for the bonds from a broad cross-section of buyers from Colorado, along with national retail investors, bond funds, insurance companies, money managers and investment advisors.
“The entire city team is to be commended,” said Chief Financial Officer Cary Kennedy. “This is such an excellent result when you consider that over $7 billion of municipal bonds are being sold into the marketplace this week. With leadership from Mayor Hancock, the Denver International Airport and Denver Finance Department staff did a fantastic job of providing vital information to potential investors, which contributed to the high demand for the bonds.”
Patrick Heck, Chief Financial Officer for Denver International Airport (DIA), said, “This strong acceptance of DIA bonds demonstrates the market’s view of DIA as a financially strong airport with a great competitive position.”
The $856 million of bonds will be repaid from revenues of the airport and were sold in three separate series of bonds. No assets of the City are at risk to repay the bonds. The 2012A bonds totaling $315.8 million are subject to alternative minimum tax. The 2012B bonds totaling $510.1 million are not subject to minimum tax. Taking advantage of the historic low costs of borrowing at certain years, $30.3 million of bonds were issued as taxable bonds.
“The South Terminal Redevelopment Program is important to Denver and the entire metropolitan region,” said Kim Day, Denver Aviation Manager. “Building the DIA train station and hotel will provide many valuable construction jobs and on-going service jobs when these airport facilities open.”
Due to the oversubscribed situation, the yields on the bonds were able to be reduced from two to ten basis points on some maturities, resulting in the true interest cost of the bonds to be 3.69%, with bonds maturing through the year 2043.
The three series of bonds were sold to refinance outstanding commercial paper and previously issued bonds and to pay for capital improvements at the airport. The refunding component portion of bonds will reduce future borrowing costs by $66.4 million, or 13% present of refunded bonds. DIA bonds are rated A1, A+ and A+ by the three major credit rating services Moody’s, Standard & Poor’s and Fitch.
The underwriters who sold the bonds were Barclays and Citigroup, which served as co-senior managers, and D.A. Davidson & Co, George K. Baum & Co., Goldman, Sachs & Co., Loop Capital Markets, RBC Capital Markets, US Bancorp and Wells Fargo Securities as co-managers.
The train station and hotel, which will be managed as a Westin Hotel, are slated to open in 2015.
Denver International Airport is the 11th-busiest airport in the world and the fifth-busiest airport in the United States. With more than 50 million passengers traveling through the airport each year, DIA is one of the busiest airline hubs in the world’s largest aviation market. DIA is the primary economic engine for the state of Colorado, generating more than $22 billion for the region annually. For more information visit www.flydenver.com, check us out on YouTube, like us onFacebook and follow us on Twitter.