San Francisco International Airport – 2011A & 2011B

San Francisco International Airport
Second Series Revenue Refunding Bonds Series 2011A (AMT) and 2011B (Non-AMT)

These bonds were issued in January 2011 to refund a 2008 mandatory tender bond, to refund existing commercial paper and to current refund a portion of the Airport’s outstanding debt.

Given the volatility in the municipal market in the late 2010, the original refunding transaction became uneconomical. As 2011 approached, the need to refund the 2008 mandatory tender bonds became of primary importance to the Airport. The opportunity to refund the mandatory tender bonds also coincided with the impending current call date on additional bonds that had high existing coupons (5.25% to 5.50%) on the short end of the yield curve, making them attractive refunding candidates.

Siebert Brandford Shank aggressively marketed AMT and non-AMT bonds and established a benchmark level for the spread between AMT and non-AMT airport bonds.

This transaction represented the first AMT airport transaction completed since the expiration of the AMT holiday. Approximately $66.5 million of bonds (2012 – 2021) were offered with retail priority—approximately $203 million retail orders were received for these bonds, of which Siebert Brandford Shank placed $196 million.

Based on Siebert Brandford Shank’s strong pre-marketing effort, we were able to lower yields on the AMT bonds by 5 basis points, and non-AMT bonds by 6 basis points. As a result of these yield reductions, the non-AMT bonds priced at extremely tight spreads to MMD.

The aggressive pricing produced an all-in TIC of 4.02%, which allowed the Airport to generate $6.6 million in present value savings or 4.27% of par refunded.