Nov. 5 (Bloomberg) -- The San Francisco Airport Commission led borrowers selling fixed-rate, tax-exempt bonds today with a $485.8 million offering to finance work on the 10th-busiest airport in the U.S. by passenger traffic.

Public air- and seaport agencies have sold more than $5.8 billion of tax-exempt bonds this year to fund construction and refinance debt, data compiled by Bloomberg show. They have been aided by provisions in the 2009 federal stimulus law waiving the alternative minimum tax on many of their deals through 2010.

San Francisco International Airport will use the money raised through banks led by Citigroup Inc. to help fund a capital plan that calls for expanding Terminal 2 and making it more resistant to earthquakes. Revenue bonds from the city-owned facility, which handled more than 37 million passengers in 2008, carry the fifth-highest ratings of A1 from Moody’s Investors Service and A+ from Fitch Ratings. Standard & Poor’s rates them one grade lower, at A.

Yields on the new issue ranged from 4.46 percent on debt due in 2020 to 5.5 percent on 30-year bonds, all of which can be bought back at face value beginning in 2019. The 30-year yield is almost one percentage point more than top-rated general obligation bonds tracked by a Bloomberg index.

The Bloomberg Fair Value Muni General Obligation AAA 30- Year gauge held at a seven-week high of 4.51 percent today. Thirty-year bonds rated A and subject to the federal alternative minimum tax, or AMT, had a yield of 6.43 percent, based on another Bloomberg index.

New York University

Many of the bonds that airports have sold this year would have been subject to the AMT if it weren’t for the Obama administration’s American Recovery and Reinvestment Act, as they finance projects that are deemed private activities.

Also today, New York University sold $401.6 million of tax- exempt bonds in a deal arranged by Morgan Stanley and the state’s Dormitory Authority. Yields ranged from 2.63 percent on six-year securities to 4.9 percent on 30-year bonds.

The largest private nonprofit university in the U.S., which sold $103 million of taxable bonds last week, will use the proceeds to renovate and reconstruct academic buildings, buy a new 735-bed residence hall on East 12th Street in Manhattan and refinance bank loans.

The university, with almost 55,000 full- and part-time students, carries ratings of AA- from S&P and Aa3 from Moody’s.

To contact the reporter on this story: Jeremy R. Cooke in New York at jcooke8@bloomberg.net.

Last Updated: November 5, 2009 18:05 EST