Florida County Shops Airport Debt to Invest in Jet Set
Florida’s Broward County, competing with neighboring Miami for air travelers, is offering $434 million in airport revenue bonds this week as such securities are beating the overall municipal market for the third straight year.
The county will use the cash to renovate terminals, expand a runway and replace gates at Fort Lauderdale-Hollywood International Airport, according to deal documents. For the $2.3 billion project, officials plan to sell about $764 million more in bonds next year through 2017.
The offering is among $4.7 billion of long-term municipal issues scheduled for this week, data compiled by Bloomberg show. That’s up from $3.7 billion last week, as benchmark yields are close to the lowest since June. Individuals pulled about $690 million from muni-focused mutual funds in the week through Oct. 2, according to Lipper US Fund Flows data.
“This community and this part of the world are very attractive to these airlines and passengers,” said Doug Wolfe, Broward County’s assistant aviation director of administration and finance. “They want to come here.”
Upgrades would improve passenger flow at the 21st-busiest U.S. airport, which handled 23.5 million passengers in 2012, according to sale documents. The facility is on the south side of Fort Lauderdale, 27 miles (43 kilometers) north of Miami International Airport.
Standard and Poor’s grades the deal A+, fifth-highest, citing the county’s “strong tourist industry and an affluent population” of about 1.8 million, according to U.S. Census data. Median household income was 102 percent of the national figure, the ratings company said.
“Competition from other airports is increasing,” said Moody’s Investors Service, noting that Miami is expanding its facility. Moody’s, too, rates the deal at fifth-highest, A1.
The issue will add to the airport’s almost $1.2 billion in debt backed by carrier fees, car rentals and parking, according to deal documents. Wolfe said he expected total financing costs to be around 4.9 percent.
Airline securities are losing 2.7 percent this year through Oct. 3, less than the decline of 3.2 percent for the entire municipal market, extending the streak since 2011, according to Bank of America Merrill Lynch indexes.
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