The city and county of Denver, Colo., planned to offer a two-day sale period to retail and institutional investors for its $349M of Series 2011A Airport System Revenue Bonds for its department of aviation, the largest alternative minimum tax transaction in more than two years, but demand was so high, they were sold in one day. The city received purchase bids from more than 70 investors and bonds were oversubscribed in every maturity.
“The successful outcome of the bond offering is a reflection of the strong financial framework of Denver International Airport,” says Kim Day, manager of aviation. “I’m pleased that the diligent work that went into our long-term financial planning is seen positively by investors. The solid pricing of the transaction demonstrates that DIA’s credit is still in strong demand and well received by investors.”
The Series 2011A bonds refunded all of the outstanding Series 2008A3-A4 bonds, as well as most of the 2000A bonds, and generated more than $10M in present value savings for the airport. The bonds were issued as fixed rate senior obligations with a final maturity of 2023. The bond financing was scheduled to close on April 14, 2011.
“In February, we introduced a 10-year financial strategy that included DIA’s capital improvement plan,” says Patrick Heck, CFO for Denver international. “Having our ratings reaffirmed last week, and investors who were eager to snap up the bond offering this week, is a confirmation that we have a solid plan that allows us to grow. Our core financial strengths, such as a strong, competitive airline market; positive traffic forecasts; coverage on our bonds; and cash on hand lets us meet the needs of the entire Rocky Mountain region.
“We’ve tested our financial model and identified mitigation measures to protect us financially against another economic downturn,” Heck continues, “and we purposely developed a plan that gives us the flexibility to respond to future changes in the Denver aviation market. Our financial goals are simple: fiscal stability and growth; maintaining competitive operating costs for our airline partners; and optimizing our existing resources.”
