Clark County (NV)
McCarran International Airport Airport System Junior Subordinate Lien Revenue Notes Series 2018A (Non-AMT)
June 6, 2018
On June 6, 2018, SCS served as senior manager for Clark County, Nevada’s Airport System. Proceeds of the Series 2018A Notes were used to pay the principal of the Series 2014B Notes. The Series 2018A Notes are secured by a third lien on Net Revenues of the Airport System, subordinate to outstanding Senior Bonds and Second Lien Subordinate Securities, and on a parity with other Third Lien Subordinate Securities.
SCS worked closely with Airport management and the Co-Financial Advisors to craft the credit story for rating agencies to position the Airport for a rating upgrade from S&P on the senior lien bonds that are currently rated Aa2/AA- by Moody’s and S&P, respectively.
In the months leading up to pricing, SCS regularly evaluated multiple structuring alternatives for the Series 2018A Notes, including assessing pricing levels across 2-, 3-, 4-, and 5-year structures.
In order to garner significant investor attention, the POS was posted alongside a slides-only investor presentation 7 days before pricing; ultimately, investors from 24 firms viewed the investor presentation and 8 submitted orders.
In the week before pricing, MMD rallied on the front end of the yield curve, with rates declining by up to 8 basis points in the first five maturities; however, on the day of pricing, there was a weaker tone in the Treasury market as the ECB signaled that it might end its bond buying program (QE) at the next policy meeting.
SCS recommended that the County enter the market with a 5% coupon 3-year maturity, spread 20 basis points over MMD as a strategy to build the book first.
As a result of the syndicate’s strong per-marketing effort and pricing strategy, the bonds were 5.3x oversubscribed with orders from 29 investors after the order period. Given the high level of orders, the Series 2018A Notes were repriced 6 basis points lower (MMD + 14 basis points), to a final yield of 1.98%.
The spread on the Series 2018A bond was tighter by 1 basis point than the comparable maturity on the Clark County School District G.O. Bonds, rated A1/A+/NR, which were priced the day before.
Pricing: June 6, 2018
Closing: June 28, 2018