Las Vegas Airport Borrowing for Terminal 2nd Time in Four Weeks

By Jeremy R. Cooke

The County, which owns McCarran International Airport in Las Vegas, is offering about $125 million in Tax-exempt debt and $453 million of Taxable Build America Bonds. Officials plan to return with another Issue in April or May to achieve a goal of selling about $1.8 billion in airport Bonds this year, said Alan Stewart, assistant aviation director for finance.

The Build America stimulus program, which lets MUNicipalities get 35 percent interest rebates on Taxable debt for public works, and another initiative that temporarily broadens airports’ ability to sell securities not subject to the alternative minimum tax, or AMT, is scheduled to expire Dec. 31.

“It’s going to be pretty busy probably toward the end of the year, so we think we can do better in the market if we get in early,” Stewart said. “We’d like to get as much of it as possible funded during this AMT holiday.”

Underwriters led by Citigroup Inc. and Siebert Brandford Shank & Co. were chosen to market the Clark County revenue Bonds to Investors. Individual, or retail, buyers placed orders yesterday, and institutions such as mutual funds and insurance companies will get to buy today.

Miami Airport

Miami International Airport, the largest U.S. gateway to Latin America, may join McCarran in the market as soon as today with a $247.5 million tax-exempt offering to help fund a $6 billion capital improvement plan. Underwriters led by Morgan Stanley will handle the deal.

The so-called double-barreled bonds will be secured first by airport revenue and then by the full faith and credit pledge of Miami-Dade County, owner of the airport. They are rated Aa3 by Moody’s Investors Service and AA- by Standard & Poor’s, the fourth-highest Investment grades.

Tax-exempt yields on top-rated 20-year general obligation bonds held steady at 3.96 percent yesterday, after reaching the lowest since at least January 2001 last week, based on a daily survey by MUNicipal Market Advisors of Concord, Massachusetts. The average yield on the Wells Fargo Build America Bond Index ended last week at 6.087 percent, the lowest since Jan. 27.

President Barack Obama this month proposed making permanent the Build America Bond program, created by the February 2009 recovery act, with a lower subsidy of 28 percent beginning in 2011. Issues under the program have come from 46 states and the District of Columbia and total about $73 billion since April 2009, data compiled by Bloomberg show.

Negative Outlook

Moody’s last week maintained its negative outlook on U.S. airports, indicating Rating cuts are more likely than increases over the next 12 to 18 months.

“U.S. airport credit remains in a tenuous position as solid growth is not expected to take hold soon and the majority of rated airports have lost varying degrees of financial flexibility in the downturn,” Kurt Krummenacker , a Moody’s analyst in New York, said in a statement.

In Clark County, passenger traffic at McCarran last year fell 8.2 percent to 40.5 million from the year before, airport officials said in a Jan. 21 release .

Standard & Poor’s cut its credit outlook on Clark County’s airport debt to negative from stable in September since the drop in passenger demand is happening while major capital projects may pressure McCarran’s finances.

Clark County

Bonds backed by a senior lien on revenue of Clark County’s airport system, which includes McCarran International and four smaller airfields for private aircraft, are rated Aa2 by Moody’s and AA- by S&P, the third- and fourth-highest ranks.

The 14-gate Terminal 3, more than halfway done and set for completion in mid-2012, is designed to help McCarran reach its maximum capacity of about 53 million passengers a year.

Clark County is also exploring the possibility of building an airport in the Ivanpah Valley , south of Las Vegas near the CALifornia border.

MUNicipal Issuers plan to issue about $5.5 billion of fixed-rate bonds this week, compared with $4.8 billion last week , according to data compiled by Bloomberg.

Following are descriptions of additional pending sales of municipal debt in the U.S.

YALE UNIVERSITY , whose $16.3 billion endowment is second only to Harvard’s in the U.S., wants to borrow about $540 million this week to complete capital projects on its New Haven, Connecticut, campus and to refinance $89 million in paper issued in 2002, preliminary offering documents show. The top-rated school plans to offer bonds to individual investors today and to institutions the following day, according to Barclays Plc, which is leading eight banks underwriting the deal. Connecticut’s Health and Educational Facilities Authority will issue the tax- exempt debt on behalf of the Ivy League school. (Updated Feb. 9)

HAWAII, the nation’s third-most-indebted state per capita after Connecticut and Massachusetts, plans to sell about $534 million in general obligation bonds this week through underwriters led by Citigroup Inc. to help fund capital projects and refinance existing debt. The deal includes $312 million in taxable, federally subsidized Build America Bonds maturing from 2015 to 2030. The balance will be tax-exempt and mature from 2015 through 2020. The securities are rated Aa2 by Moody’s Investors Service, which lowered its outlook on the state credit to negative from stable on Feb. 4. Fitch Ratings and S&P rate Hawaii AA. (Updated Feb. 9)

CALIFORNIA’S EAST BAY MUNICIPAL UTILITY DISTRICT, which provides water to 1.3 million customers in an area around Berkeley and Oakland east of San Francisco Bay, intends to offer $400 million of 30-year Build America Bonds through Morgan Stanley today to fund construction projects. The district’s water system subordinated revenue bonds are rated AA by Fitch, Aa2 by Moody’s and AAA by S&P. (Updated Feb. 9)

KENTUCKY’S OWENSBORO MEDICAL HEALTH SYSTEM, the largest employer in Daviess County, plans to sell about $545 million of tax-exempt bonds through underwriters led by Bank of America Merrill Lynch as soon as this month. The money raised will finance a 447-bed replacement hospital and refinance existing obligations. (Updated Feb. 9)

VIRGINIA PUBLIC BUILDING AUTHORITY plans to sell $317.2 million in revenue bonds through competitive bidding tomorrow to help finance public improvement projects. The securities are rated AA+ by Fitch and S&P, the second-highest of 10 investment grades. (Updated Feb. 9)

UNIVERSITY OF MICHIGAN, the state’s oldest university, will seek interest-cost bids today from investment banks interested in underwriting $190.5 million of tax-exempt bonds in a deal to refinance debt. Maturities range from 2011 through 2027. The Ann Arbor-based public university carries top credit Ratings from Moody’s and S&P. (Updated Feb. 9)

To contact the reporter on this story: Jeremy R. Cooke in New York at jcooke8@bloomberg.net .