FOR IMMEDIATE RELEASE
December 17, 2014
Contact: Mike Kanarick
802.735.7962
Mayor Miro Weinberger and Aviation Director Gene Richards Announce $15.7M BTV Bond Refinancing Closing a Success
Lower Interest Rate and Nearly $1M in Savings Made Possible by Moody’s Recent Credit Rating Improvement to Investment Grade from “Junk” Bond Status
Burlington, VT – Mayor Miro Weinberger and Director of Aviation Gene Richards today announced the successful closing of a $15.7 million revenue bond refinancing for Burlington International Airport (BTV), saving the Airport nearly $1 million. A lower interest rate, increased savings, reduced debt load, and improved cash flow were made possible through the recent Moody’s Investors Service credit rating upgrade from “junk” bond status to investment grade – the first upgrade in more than four years.
“Today’s closing is more evidence that the nearly three years of focus and commitment by Burlingtonians on improving municipal finances are paying off,” said Mayor Weinberger. “The long-term savings will reduce the Airport’s expenses and continue the growth of the Airport’s fiscal strength. I am grateful to the Airport staff, City financial officials, the Airport Commission, and the City Council, who have worked together so effectively to achieve these substantial savings.”
Highlights of the refinancing deal, which closed this morning, include:
- Net present value (NPV) savings of $956,854 for BTV;
- Lower annual debt payments achievable through $280,000 of annual cash flow savings through 2028; and
- New, lower 3.74 percent interest rate with all costs loaded into the deal (1.25 percent lower than previous rate).
The City issued the Series 2014 bonds to use the funds, along with other available funds, to accomplish the following:
- Refund all the City’s outstanding Airport Revenue Bonds, Series 2003A Bonds, which were issued for Airport capital improvements;
- Fund the Debt Service Reserve Fund with respect to the Series 2014 Bonds; and
- Pay the costs of issuance associated with the Series 2014 Bonds.
“The staff at BTV and the City of Burlington continues to work incredibly hard to strengthen the Airport’s performance and financial standing,” said Aviation Director Richards. “We offer special thanks to Tim McNutt and the entire underwriting team at Jefferies. We will keep making our daily push to move our Airport forward.”
Moody’s Upgrade
The November 12, 2014 Moody’s Ratings Report offered the following rationale for the rating upgrade on the City’s $43 million Airport revenue bonds from “junk” bond Ba1 to investment grade Baa3:
- “…improvement of financial metrics including debt service coverage and liquidity after a period of volatility in recent years.”
- “…recent trend of enplanements, which turned positive in 2014 after several years of declines.”
- “…fundamental strength of the City of Burlington economy and the low cost per enplanement that are expected to keep air travel demand at or above current levels.”
Moody’s suggested that the rating could further improve through sustained enplanement and revenue growth or from a significant liquidity increase.
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