Airport News:

Nashville First Airport Authority to Issue Bonds as Part of Stimulus Bill


NASHVILLE, Tenn. - March 19 - The Metropolitan Nashville Airport Authority (MNAA) is the first airport authority to seize the benefit of the Stimulus Bill allowing airports to issue tax-exempt bonds, according to The PFM Group, financial advisor assisting the Authority.

 

The MNAA priced bonds totaling $36 million to fund Phase II of the Terminal Renovation Program at Nashville International Airport (BNA). The bonds are not subject to the Alternative Minimum Tax (AMT) for individuals or corporations. Avoiding the AMT market premium is estimated to have saved MNAA $3.2 million in total debt service savings.

 

“The issuance of bonds at this point in a challenging economic environment reflects the Nashville Airport Authority’s continual commitment to sustainability in all areas, including sound fiscal management,” said Raul Regalado, president and CEO of the MNAA, which owns and operates BNA and John C. Tune Airport. “With the guidance and support of the MNAA’s Board of Commissioners, the MNAA team of professionals constantly analyzes and adjusts to ensure the Authority remains viable.”

 

An underwriting team composed of Morgan Keegan (lead senior manager), Morgan Stanley and Harvestons Securities, a small, minority and women-owned business enterprise (SMWBE) partner, successfully sold the bonds, despite a very heavy municipal issuance calendar and an environment of increasing municipal yields. The bonds were marketed with insurance purchased by Assured Guaranty, carrying a rating of AAA/Aa2, one of only two remaining traditional bond insurers to claim AAA rating status.

 

The bonds will also be used to fund a debt service reserve fund and to pay issuance costs related to the bonds. The true-interest cost of the bonds is 4.36 percent, reflecting relatively low rates relative to the last 10 years. The average life of the bonds is 7.018 years, capturing the relatively low borrowing rates of a very steep yield curve.

 

Phase II of BNA’s terminal renovation, which should be completed in 2010, includes:

  • Installing New Gate Podiums
  • Renovating Bag Claim
  • Renovating Hold Rooms
  • Renovating Restrooms and Adding Capacity
  • Replacing Public Area Carpet
  • Replacing Wall Coverings
  • Replacing HVAC Units