"MAC sells more bonds for airport expansion"

Thursday, June 19, 2003

MAC sells more bonds for airport expansion
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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