he Ontario International Airport Authority (OIAA) today announced the sale of Airport Revenue Bonds totaling more than $103 million, the proceeds of which will finance essential capital improvement projects, pay off a previously issued interim borrowing and make the final payment for the transfer of Ontario International Airport (ONT) from the City of Los Angeles in 2016.
The Series 2021 Bonds are backed by airport revenues from landing fees, terminal rent and concession fees, among other revenue sources, and are driven by strong cargo volumes and projected passenger increases at ONT. The Series 2021 Bonds, in the aggregate amount of $103,340,000, were sold in three series as follows:
- $57,750,000, Series 2021A (Non-AMT)
- $41,685,000, Series 2021B (AMT)
- $3,905,000, Series 2021C (Taxable)
A portion of the proceeds will be allocated to a variety of ONT capital projects including airfield improvements and passenger terminal enhancements.
“We are gratified to learn of the exceptionally strong demand for ONT Revenue Bonds,” said Alan D. Wapner, President of the OIAA Board of Commissioners and Mayor pro Tem for the City of Ontario. “The investor confidence reflects our region’s role as a dynamic population and economic center, and Ontario Airport’s unconstrained opportunities moving forward. It also further validates that under local control the airport is operating effectively for our airline partners, customers and other stakeholders, and is well positioned to meet the growing demand for air travel and cargo shipments.”
Morgan Stanley & Co. LLC served as underwriter on the Series 2021 Bonds which reflected an interest cost of 3.06%. Interest is payable semiannually on May 15 and November 15, beginning November 15, 2021 with final maturity date of May 15, 2051.
In taking advantage of historically low interest rates, the Series 2021 Bonds include $23.3 million to make the remaining payment due to Los Angeles World Airports (LAWA) following the transfer of control of ONT to the OIAA. The transfer agreement required the repayment of $120 million to LAWA of which $50 million was paid at closing. The $70 million balance was to be repaid from Passenger Facility Charge (PFC) fees collected at ONT with the final payment due October 2026. The early payoff will provide flexibility for the use of future PFC collections at ONT to fund needed improvements necessary to keep pace with increase passenger volumes.
OIAA will also use proceeds of the Series 2021 Bonds to retire the approximately $34.7 million outstanding amount of interim financing issued by the OIAA as well as other bond issue costs related to the 2021 offering.
The underlying rating assigned to the Bonds by Fitch Ratings is ‘A-‘. Fitch also affirmed ONT’s $33.4 million outstanding airport revenue bonds at ‘A-‘. Standard and Poor’s issued an ‘A-‘ underlying rating on the bonds.
The timely payment of debt service on the Series 2021 Bonds is guaranteed by insurance provided by Assured Guaranty Mutual Corp. Based on the insurance policy guarantee, the Bonds carry a rating of AA from Standard and Poor’s.