"MAC sells more bonds for continued airport expansion"

Thursday, June 19, 2003

MAC sells more bonds for continued airport expansion
By Dan Wascoe Jr.
The Minneapolis (MN) Star Tribune


Runway construction and noise insulation around the Minneapolis-St. Paul
International Airport will continue after Wednesday's sale of $105 million
in bonds at some of the lowest rates in years.

The Metropolitan Airports Commission sold the subordinated bonds at 4.71
percent, compared with 5.25 to 5.9 percent in past bond issues, said Steve
Busch, the commission's finance director.

The commission's credit rating for subordinated bonds is A from the Fitch
and Standard & Poor rating agencies. The rating reflects their judgment that
the bonds are likely to be repaid but with less certainty than issues
bearing AAA or AA ratings. Busch said the A rating was confirmed shortly
before the sale and takes into account recent financial difficulties in the
airline industry. Airline rents, fees and charges are key sources of airport
revenue.

Because of the Sept. 11, 2001, terrorist attacks and many airlines'
problems, the commission put off last year's scheduled bond issue and cut
back or slowed work on many construction projects. It could return to the
market with one to three more bond issues in 2005, Busch said.

Besides helping to pay for construction projects, the proceeds from
Wednesday's sale will retire commercial paper bearing 1 to 2 percent rates.
That ought to put the commission in a position to raise cash in a hurry, he
said.

According to its prospectus, the commission has about $394 million in other
outstanding subordinate debt and $974 million in senior debt, all backed by
airport revenues. It also has $344 million in outstanding general obligation
bonds backed by revenues and, if needed, a property tax.

Most of the commission's debt is related to the $3.1 billion expansion of
the airport, a decision made by the Legislature and former Gov. Arne Carlson
in 1996.


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