Las Vegas Airport Collects From Revelers to Pay Debt

Even as Las Vegas revelers depart McCarran International Airport, they leave behind more than just their escapades in Sin City.

Clark County, which runs the airport serving visitors to the tourist mecca that advertises “What Happens Here, Stays Here,” this week plans to sell about $316 million of bonds backed by the facility’s revenue, such as fees and rental income.

Officials expect passenger traffic to rise 0.9 percent in fiscal 2015 and 0.6 percent the following year, according to documents for the mostly tax-exempt deal.

“We’re cautiously optimistic that we will continue to enjoy some growth, particularly on the international side, over the next three years,” Joseph Piurkowski, chief financial officer for Clark County Aviation Department, said in an e-mail. “There is also potential for future growth as more Las Vegas hotel rooms are scheduled to come online over the next few years.”

The borrowing cost of the subordinate lien revenue debt, which would retire securities issued in 2004, may be around 4.3 percent, saving $28.6 million, he said.

McCarran is located on Wayne Newton Boulevard one mile (1.6 kilometers) from the gambling and entertainment core known as the Strip. It is the second-largest U.S. origin and destination airport after Los Angeles International, according to deal documents.

Revenue Rising

Last year, McCarran collected $79.9 million in passenger-facility charges, up from $75.3 million in 2009, the documents show.

Last week, Moody's Investors Service gaves the subordinate debt an A1 mark, fifth-highest. It also put on review for downgrade the senior lien debt of the county's Airport Enterprise, which owns and operates the facility.

Subordinate airport revenue bonds issued for Clark County Department of Aviation and maturing in July 2038 traded March 14 at an average yield of 3.35 percent, or 2.67 percentage points above top-rated municipal debt, data compiled by Bloomberg show. That’s lower than the average gap of 3.40 percentage points this year. The bonds are insured by Ambac Assurance Corp.

Airport securities are on pace to beat the broader $3.7 trillion market for the fourth consecutive year, according to Bank of America Merrill Lynch indexes. The obligations have earned about 4 percent this year, compared with 3.6 percent for the entire market.

Clark County joins issuers selling about $4 billion in long-term debt this week, down from $12.8 billion last week. Even after rising the past two weeks, benchmark 10-year yields are close to the lowest since June.

Individuals added about $224 million to muni mutual funds in the week through March 12, Lipper US Fund Flows data show. It was the fifth straight week of inflows.

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