LOS AN­GE­LES WORLD AIR­PORTS WILL

The Bond Buyer - - Front Page - By Kee­ley WeB­ster

ride a rat­ings up­grade when it prices $650 mil­lion in sub­or­di­nate rev­enue bonds on Wed­nes­day .. . . . . . . . . . . . .

LOS AN­GE­LES — Los An­ge­les World Air­ports will ride a rat­ings up­grade when it prices $650 mil­lion in sub­or­di­nate rev­enue bonds on Wed­nes­day.

This deal will help fund mile­stone pay­ments to the pri­vate part­ners on the au­to­mated peo­ple mover a pri­vate part­ner is build­ing to move trav­el­ers to the air­port, ac­cord­ing to Ryan Yaku­bik, the air­port’s chief fi­nan­cial of­fi­cer. It will also fund ter­mi­nal con­struc­tion and ren­o­va­tions.

The Los An­ge­les Depart­ment of Air­ports will price the deal in two tranches, a $483.3 mil­lion Se­ries D AMT and $166.7 mil­lion Se­ries E non-AMT.

JPMor­gan is lead man­ager, with Loop Cap­i­tal Mar­kets and PNC Cap­i­tal Mar­kets as co-man­agers. Bond coun­sel is Den­tons U.S. LLP. Dis­clo­sure coun­sel is Polsinelli LLP. PFM Fi­nan­cial Ad­vi­sors and Frasca & As­so­ci­ates LLC are co-mu­nic­i­pal ad­vi­sors.

LINXS, the five-mem­ber pri­vate con­sor­tium build­ing the 2.5-mile peo­ple mover, sold $1.2 bil­lion in pri­vate ac­tiv­ity bonds for the project in June through con­duit is­suer Cal­i­for­nia Mu­nic­i­pal Fi­nance Author­ity. The deal was 6.7 times over­sub­scribed.

“It’s tough to say if these bonds will see as much, or more in­ter­est, than the pri­vate ac­tiv­ity bonds, given the dif­fer­ences in the bonds,” Yaku­bik said. “The back­ing and the risk are dif­fer­ent. We may see a to­tally dif­fer­ent pop­u­la­tion of in­vestors on this.”

The LINXS bonds came with a BBB-plus rat­ing from Fitch Rat­ings. LAX debt has much higher rat­ings, buoyed by an up­grade ahead of this week’s deal.

Moody’s In­vestors Ser­vice up­graded LAX’s $3.4 bil­lion of se­nior rev­enue bonds to Aa2 from Aa3 Mon­day and $2.7 bil­lion of sub­or­di­nate rev­enue bonds up­graded to Aa3 from A1. .

This week’s sub­or­di­nate bonds come with AA-mi­nus rat­ings from both Fitch and S&P Global Rat­ings. All three rat­ing agen­cies as­sign sta­ble out­looks.

The air­port serves 85 mil­lion pas­sen­gers a year, so try­ing to fix that en­vi­ron­ment while manag­ing the air­port is chal­leng­ing, Yaku­bik said.

“We know we have to fix it, and part of that process has to be ‘please ex­cuse our dust,” Yaku­bik said. “We are very fo­cused even through the con­struc­tion that we main­tain pas­sen­ger ac­cess to the air­port. These projects are the only way we can make it bet­ter.”

On Oct. 18, the air­port board ap­proved Oct. 18 a $2.028 bil­lion, 28-year con­tract for L.A. Gate­way Part­ners to de­sign, build, fi­nance, op­er­ate and main­tain the air­port’s con­sol­i­dated rent-a-car fa­cil­ity.

The ConRAC fa­cil­ity will be con­nected to the au­to­mated peo­ple mover, which will elim­i­nate the need for rental car shut­tles to ac­cess the cen­tral ter­mi­nal area. With the re­moval of rental car shut­tles, LAX will see a re­duc­tion in shut­tle traf­fic. ◽

Bloomberg News

A trav­eler at Los An­ge­les In­ter­na­tional Air­port last week. The city’s air­port depart­ment is pric­ing $650 mil­lion of sub­or­di­nate bonds Wed­nes­day.

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