ALLEGHENY COUNTY AIRPORT AUTHORITY ANNOUNCES SUCCESSFUL DEBT REFUNDING
PITTSBURGH, PA (August 18, 2010) – Recently the Allegheny County Airport Authority completed the refunding of more than $30 million in outstanding debt. The target savings approved by the Airport Authority Board was 3% and the refunding was completed at 5.14%. This translates into an estimated annual savings of over $260,000.00 per year for the next seven years.
Refunding debt is a transaction where one bond issue is redeemed and replaced by a new bond issue under conditions more favorable to the issuer. The proceeds from the sale of the refunding bonds are used to purchase taxable government securities, which are deposited in an escrow account. The refunding bonds are secured by the same sources of airline revenue previously pledged to the payment of the outstanding bonds.
The Airport Authority management team involved in the transaction worked effectively so that all refunding is significantly over subscribed today. This is additional proof that the Authority is viewed as a sound and stable business entity, and is seen as an improving credit as evidenced by the positive credit outlook by Standard & Poor’s. The Authority's annual debt payments are about $62 million with total debt at $435million.
“These savings can be applied to drive down the cost per enplaned passengers at Pittsburgh International Airport by reducing costs to the airlines. Recently, Moody’s and Standard and Poor’s upgraded the outlook for the Allegheny County Airport Authority debt, a clear indicator that Pittsburgh International Airport has turned the corner,” stated Glenn R. Mahone, Chairman, Allegheny County Airport Authority. Standard & Poor's Ratings Services upgraded its outlook to "positive" from "stable," while Moody's Investors Service upgraded its outlook to "stable" from "negative." Fitch Ratings maintained a "stable" outlook.
“Our declining debt and the successful transition from a hub to an origination and destination airport has brought about this improved financial picture,” said Bradley D. Penrod, Allegheny County Airport Authority.