Multi-billion-dollar renovation and expansion plans for Northern Virginia’s two commercial airports are not scaring off the nation’s financial firms that are being called upon to help finance them.
Officials with the Metropolitan Washington Airports Authority on July 17 pronounced themselves pleased with results of the June sale of about $825 million in debt, some of it for new projects and the rest to refinance older obligations.
“We came to a successful result,” said Mary Helou, the authority’s debt-program manager, who briefed authority board members at the meeting.
The authority received a total of $5.1 billion in bids from 76 institutional investors for the debt, and will end up paying an overall effective interest rate of 4.46 percent, down slightly from the last bond sale in 2023. The figure represents the aggregate interest rate for a series of bonds, some of which will run through 2054 and others for shorter lengths.
The debt sale was the first since the airports authority unveiled a new lease-use agreement it aims to sign with airlines that operate at Ronald Reagan Washington National and Washington Dulles International airports. It comes as the authority also is moving forward with significant new capital expansion at both facilities.
Authority leaders noted that the June 5 debt offering went to market during what had been the largest weekly total volume of bond offerings nationally since 2017.
“We came into the market with a considerable amount of competition,” said Mark Uncapher, a Maryland appointee to the authority who serves as vice chair of the board and co-chair of its finance committee.
His finance committee co-chair, Judith Batty (District of Columbia) termed the ultimate results “wonderful,” although board member William Sudow (Virginia) acknowledged that “there’s always some nail-biting” until the bids are opened.
In May, the authority board had authorized a sale of up to $1.1 billion in debt, depending on market conditions at the time of the sale. Of the $823.6 million that was offered and sold, $395 million will go toward new projects, the remainder to pay off higher-interest-rate bonds issued in 2014 and 2015.
(Like a homeowner seeking the best deals as interest rates drop, the authority since 2010 has refinanced more than $5.2 billion in debt to achieve lower rates, saving an estimated $642 million in interest costs.)
Before the debt sale, the nation’s three largest bond-rating houses reassessed the airports authority’s financial condition. The authority retained AA-minus ratings from Fitch and S&P Global and its rating of Aa3 from Moody’s Investor Service.
In each case, ratings for the airports authority’s debt are in the upper half of investment-grade scorecards of the respective firms.
“Moody’s has a favorable view of management’s ability to prudently execute the capital investments and preserve a healthy capital structure and debt-service coverage,” analysts from that firm said when gauging the authority’s credit-worthiness in mid-May.
“Despite the planned additional debt to fund the new, extensive capital-investment plan, the authority’s credit metrics and liquidity will remain at adequate levels,” the analysts said.
It was an expectation the authority plans to continue, Helou said. “We have a strong history of delivering on these major projects,” she said.
