San Diego Business Journal

Airport Authority Issues Low Interest Bonds for Green Build Project

Monday, January 21, 2013

Nearly $400 million in revenue bonds issued Jan. 16 by the San Diego County Regional Airport Authority, the agency that manages Lindbergh Field, garnered a remarkably low 3.92 percent interest rate from investors.

Vernon Evans, the agency’s chief financial officer, said the bargain pricing for the debt used to pay for the airport’s Green Build improvement project was caused from a debt-hungry market and a lack of competing municipal borrowers.

“We were five times oversubscribed,” Evans said, meaning the airport authority could have issued more than $2 billion in bonds if it needed because there were so many buyers.

“There weren’t a lot of bonds out there, and there was a lot of the money coming in, and they were all looking for bonds,” Evans said.

The demand was so high that Evans and consultants determined to sell the agency’s entire debt at once instead of waiting another day to sell the bulk of the bonds to institutional investors. The final tally of 30-year bonds sold was $379.6 million.

“We were glad we did that because if we had waited until Thursday, it would have cost another 5 basis points,” Evans said.

The 3.92 percent rate beat the 4.38 percent rate the airport authority paid in 2010 when it issued $573 million in revenue bonds for the same project.

The $1 billion Green Build which began in 2009 involves construction of 10 new gates at Terminal 2, the westernmost terminal at Lindbergh; a new dual roadway; additional parking for overnight jets; expanded and improved concessions; and the doubling of security checkpoints.

The project is about 75 percent completed, and expected to be finished in August, airport officials said.

— Mike Allen