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San Francisco Airport Commission (CA)



Second Series Revenue Refunding Bonds, Series 2020A (AMT), Series 2020B (Non-AMT), Series 2020C (Taxable)

August 5, 2020


Image by Sam Mgrdichian

Proceeds from the Series 2020ABC Bonds were used to refund certain outstanding SFO bonds for purposes of debt service savings as well as to reduce debt service payable in FY 2020/21 through 2022/23 to help mitigate impacts of COVID-19 on SFO’s financials.

SWS led the development of the rating agency presentation for the transaction. Given the ever-evolving impacts and uncertainty surrounding COVID-19 on SFO and the airport sector in general, SWS worked with SFO and its 3 financial advisors to create an entirely new and customized rating agency presentation that focused on: Impacts of COVID-19 on SFO and management’s response, SFO’s financial recovery strategy, financial planning scenarios, and projected financials, the status of the capital plan and use and lease agreement, SFO’s liquidity position and financial management tools, the strength and resiliency of SFO to weather COVID-19, and SFO’s ratings were affirmed by Moody’s and Fitch at A1 and A+, respectively. S&P’s rating was downgraded to A from A+ due to concerns relating to the COVID-19 pandemic – 5 other airports had been downgraded by S&P in the weeks leading up to SFO’s pricing.

The joint-senior managers assisted SFO with preparing and recording an Investor Presentation that was ultimately viewed by 49 unique investors. SFO staff also participated in 16 one-on-one calls with investors, 6 of which ultimately placed orders for SFO’s bonds. Leading into pricing, both the municipal and Treasury markets were strong, with MMD continuing to reach new all-time lows. Three large transactions for DFW Airport (the first of which was senior managed by SWS) had successfully priced in the weeks leading up to SFO’s issuance, with credit spreads in the airport sector continuing to tighten, but still much wider than pre-COVID levels.

The Bonds were structured with back-loaded debt service in order to maximize the amount of savings in FY 2021 through 2023. The AMT and non-AMT bonds were structured with serials bonds from 2037-2040. 4.00% coupons were used in most maturities given significant investor demand. The taxable bonds were structured with a term bond in 2051. Each of the series has a 10-year par call.

As a result of the syndicate’s strong pre-marketing efforts and aggressive pricing strategy, the transaction received significant interest from investors including $827 million of total orders on the two tax-exempt series (5.1x oversubscribed) and $973 million of taxable orders (7.5x oversubscribed). Priority orders from 30 different investors were received on the two tax-exempt series and 27 different investors on the taxable portion. This oversubscription allowed the underwriters to tighten spreads at re-pricing by as much as 9 bps on the AMT Bonds and 12 bps on the Non-AMT Bonds.

The taxable bonds were tightened by 15 bps compared to levels during the Indications of Interest period. The Series 2020ABC Bonds generated savings of $53.5 million, $68.3 million, and $70.1 million in FY2021, 2022, and 2023, respectively, and total NPV savings of $46.9 million (13.9% of refunded par).

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