The City of St. Louis saved more than $29 million by refinancing St. Louis Lambert International Airport’s Series 2009A-1 Airport Revenue bonds on Thursday, June 27.
The financing was well received by the market with robust investor interest. Investors’ orders amounted to 3.4 times the amount of offered bonds, or more than $317 million. This interest was in part due to rating upgrades since 2018, reflecting the strength of the airport’s credit quality.
“With favorable market conditions, the City of St. Louis was able to deliver a $29.26 million present value savings for St. Louis Lambert International Airport,” said St. Louis Comptroller Darlene Green. “This is a victory for the people of St. Louis and the flying public, as these savings enhance the operating efficiency and financial strength of our airport.”
The majority of the financing’s savings were structured within the first five years to help manage the airport’s future debt service and maintain the airport’s cost per enplanement and operations. The entire financing resulted in an aggregate all-in true interest cost of 2.87 percent.
As part of the transaction, the City of St. Louis issued approximately $23 million of new airport revenue bonds that will fund a variety of projects in the airport’s five-year capital improvement plan.
“This bond refunding continues to further enhance our financial sustainability with the net present savings that not only reduces future debt payments, but also happens to cover the cost of a new bond issuance that will cover new investments into airport facilities and equipment,” said airport Director Rhonda Hamm-Niebruegge.
Prior to selling the bonds, S&P Global Ratings assigned its “A” rating to the city’s Series 2019 airport revenue and refunding bonds issued in 2009 and upgraded its rating on outstanding airport revenue bonds to “A” from “A-.” The outlook for all city airport bond ratings by S&P is stable. In addition, Moody’s Investor Services affirmed its rating for the city’s airport bonds at ‘A2’ with a stable outlook.
This good news about the airport’s fiscal health comes at a time when both Mayor Lyda Krewson and Aldermanic President Lewis Reed support a study of whether the city should privatize airport operations that was initiated by financier and political speculator Rex Sinquefield. Green opposes the study.