Guam Debt Lags as Airport Plans First-in-Decade Sale: Muni Deals

Guam’s only commercial airport is selling $247 million in debt this week as bonds from issuers in the U.S. territory are losing more than the market for the first time since 2008.

The deal from the A.B. Won Pat International Airport Authority in the island of 160,000 about 4,000 miles (6,436 kilometers) west of Hawaii would refinance bonds sold 10 years ago, when it last issued debt, documents show. Proceeds would also finance projects such as a new international arrivals corridor and security lanes.

Moody’s Investors Service ranks the debt Baa2, two steps above junk. The airport enjoys a monopoly, yet its revenue can be volatile due to its susceptibility to typhoons and Japanese discretionary spending, the company said. Passengers declined at an average annual rate of 2.4 percent in the 10 years through 2012 because of fewer flights to Saipan and other islands by the airport’s main carrier, United Continental Holdings Inc., according to deal documents.

Guam, the westernmost American territory, says its slogan is “Where America’s Day Begins.” Settled about 4,000 years ago, the island has been a U.S. territory since 1950 and has been also under Spanish and Japanese control.

Now Boarding

Debt from Guam issuers has lost 6.3 percent this year through Aug. 22, compared with a 4.8 percent decline in the broad $3.7 trillion muni-bond market, Barclays Plc data show. The island’s index, with an average rating of about three steps above junk, outperformed since 2009 as interest rates fell to generational lows and investors sought higher-yielding debt.

Rolenda Faasuamalie, a spokeswoman for the Guam airport, said it “is in a strong financial operating position” because of the “potential for greater growth in enplanements.”

The agency will save about $12.3 million from the refinancing, she said in an e-mail.

A Guam airport bond maturing in 2018 that is subject to the alternative minimum tax traded nine times Aug. 6, the most since February 2012, data compiled by Bloomberg show. The average yield of 4.68 percent was about 3.52 percentage points more than benchmark AAA munis. The spread was 2.79 percentage points on April 24.

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