$388,020,000 Airport System Revenue and
Refunding Bonds, Series 2019AB
Transaction Results
Report to the Finance Committee
Ronald Reagan Washington National Airport Washington Dulles International Airport Dulles Toll Road Dulles Metrorail
$163,110,000 Dulles Toll Road First Senior Lien
Revenue Refunding Bonds, Series 2019A
Purpose To report the results of the Series 2019AB Airport System Revenue and Refunding Bonds sold on June 4, 2019 and the 2019A Dulles Toll Road (DTR) First Senior Lien Revenue Refunding Bonds sold on June 6, 2019, including:
Transaction details Pre-pricing efforts Transaction highlights, and Results
Aviation Transaction
Underwriters:
Senior Manager: Jefferies Co-Senior Manager: Siebert Cisneros Shank & Co., L.L.C. Co-Managers: Barclays, Citigroup Global Markets, Goldman Sachs, J.P. Morgan Securities Inc., Morgan Stanley, and UBS Financial Services, Inc.
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Dulles Toll Road Transaction Underwriters
Senior Manager: Ramirez & Co. Co-Managers: Loop Capital Markets, RBC Capital Markets, Wells Fargo Securities
In May 2019, the Board authorized issuance of the Series 2019AB Airport System Revenue and Refunding Bonds, which included:
refunding approximately $183 million of Series 2009B Bonds new money bonds to fund about $250 million of project costs
At the May Finance Committee meeting, staff reported the estimated refunding savings of approximately $27.1 million
This report will provide details on the actual final savings
Background
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Assuming May 13, 2019 Rates and July 3, 2019 Delivery Date
Type of Bonds Par Refunded ($M) Series 2019 Par ($M)*
Estimated Net PV Savings ($M)*
Estimated Net PV Savings (%)*
Refunding 2009B $183.3 $164.9 $27.1 14.8%
New Money & required reserves - $274.3 - -
Total $183.3 $439.2 $27.1 14.8%
Also in May 2019, the Board authorized issuance of the Series 2019A DTR Revenue Refunding Bonds, which included:
refunding approximately $198 million of Series 2009A Bonds At the May Finance Committee meeting, staff reported the estimated refunding savings of approximately $40.3 million
This report will provide details on the actual final savings
Background (continued)
4
Assuming May 13, 2019 Rates and July 3, 2019 Delivery Date
Type of Bonds Par Refunded (M) Series 2019 Par* (M) Est. Net PV Savings (%)*
Est. Net PV Savings (M)*
Refunding 2009A $198.0 $166.8 $40.3 20.4%
Transaction Schedule
April 26: Distribute
documents to Rating
Agencies
May 3,6: Rating Agency
meetings
May15: Request Finance
Committee and Board Approval
May 16: Receive ratings/
Post POS
June 4 (Aviation), June 6 (DTR): Bond
Pricing, Chair or Vice Chair and Co-Chair of Finance Committee
approve final terms of the Bonds
July 3 (Aviation),
July 10 (DTR): Closing and
Delivery
Chair or Vice Chair executes
the Bond Purchase Contracts
Chair or Vice Chair, CEO and
CFO execute required Closing
Documents
Jan/Feb: Engage Airport and Traffic and Revenue
Consultant and Underwriting
Team
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Aviation Credit Ratings Affirmed Credit Positives Extremely strong service area economic fundamentals including favorable economic activity Strong market position exhibited by the Metropolitan Washington Airports Authority’s (Airports Authority) two large
hub airports that serve as an essential and dominant provider of air service to the nation's capital Strong track record in system-wide enplanement growth; diverse and well-balanced air carrier mix System-wide improvement in financial profile and competitive position Extremely strong governance and management evidenced by a deep and experienced team Cost per enplanement significantly below prior forecasts Beneficial Airline Use and Lease Agreement providing strong rate-setting flexibility combined with the ability to
transfer revenues between airports Outstanding liquidity and satisfactory forecasted debt service coverage ratios (DSCR)
Other Comments The airport system has comparatively higher cost, debt per enplaned passenger levels and forecast additional
bond-financed capital A continued focus on cost containment and conservative management of financial operations will help to achieve
forecasted or better than forecasted metrics through 2024
Moody’s S&P Fitch
Aa3 (Stable) AA- (Stable) AA- (Stable)
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Series 2019AB Aviation Transaction Summary OVERALL AMT Non-AMT
Total Par: $388,020,000 $287,930,000 $100,090,000
All-in True Interest Cost (TIC): 3.14% 3.36% 1.69%
Average Maturity 14.3 years
Projects Financed: $251,005,156
New Money Par: $233,325,000
Refunded Par: $183,295,000 $64,150,000 $119,145,000
Refunding Par: $154,695,000 (par reduction of $28,600,000) $54,605,000 $100,090,000
Total Priority and Retail Orders $863.2 million
Total Subscription 2.2x 1.4x 4.5x
Over Subscription 1.2x 0.4x 3.5x
Gross Savings: $36,658,616: IAD $31,838,287 / DCA $4,820,329 $12,223,855 $24,434,762
Present Value (PV) Savings: $32,264,286: IAD $28,021,778 / DCA $4,242,508 $10,757,015 $21,507,271
PV Savings as a % of Refunded Par: 17.6%
Underwritten Amount: $66.5 million $66.5 million 7
Aviation Investor Outreach to Create Demand 64 unique internet investor roadshow views 18 institutional investor meetings and calls 10 investors, who were directly marketed, placed orders totaling $296 million (4 of which
were new investors)
*New Investor 8
Investor Type of Contact
Series 2019A Bonds Orders
($000) 16th Amendment Call - Blackrock Call 51,155 Boston Company Meeting - Brown Advisory* Call 5,000 Capital Research Call 36,390 Cuna Mutual Call - Deutsche (Scudder)* Call 5,000 Deutsche Asset Management Call 25,000
Eaton Vance Meeting 19,565
Investor Type of Contact
Series 2019A Bonds Orders
($000)
JPM CIO Meeting -
JPMIM Call 17,870
Loews Meeting -
Northwestern Mutual* Call 30,000
Old Orchard Call -
Standish Mellon Meeting -
UBS* Meeting 250
Vanguard Call 105,360
Wellington Meeting -
Eight of the Top 20 Airports Authority Airport System Bondholders Placed Orders
Rank Investor Holdings ($000)
Series 2019AB Bonds Orders
($000)
1 JPMIM 157,250 17,870
2 T. Rowe Price 143,675 32,825
3 Nuveen 142,960 98,435
4 Vanguard 141,115 105,360
5 BlackRock 87,902 51,155
6 Charles Schwab 87,230 -
7 Fidelity 80,555 94,895
8 New England Asset Mgmt 79,590 -
9 Allstate 77,880 -
10 Deutsche 65,060 25,000
*Source: iPREO BD
Rank Investor Holdings ($000)
Series 2018A Bonds Orders
($000)
11 Berkley Dean 47,055 -
12 PineBridge 38,045 -
13 Standish Mellon 37,600 -
14 HIMCO 37,205 -
15 Federal Insurance Co 36,915 -
16 AllianceBernstein 33,140 -
17 Metlife 31,280 -
18 Nationwide 30,800 -
19 Invesco 30,495 10,000
20 Chubb 30,435 -
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Total Aviation Orders Were $863 Million From a Total of 44 Institutional Investors, Including $217 Million From 23 New Investors
*New Investor
Investor Orders ($000) Allotments ($000) Vanguard Funds 105,360 13,260 Nuveen Asset Management 98,435 18,585 Fidelity Management & Research 94,895 23,100 Blackrock Financial Management 51,155 11,500 American Century* 38,455 19,425 Capital Research 36,390 10,940 Oppenheimer Funds 33,470 21,330 T. Rowe Price 32,825 12,950 Goldman Sachs Asset Mgmt 32,810 9,305 Franklin Fund 32,000 24,585 Northwestern Mutual* 30,000 20,000 US Trust Bank of America* 29,920 3,500 Tolleson PWM* 29,435 12,460 Deutsche 25,000 15,000 Eaton Vance 19,565 13,645 JPMIM 17,870 9,500 Columbia Management Group 14,355 5,850 PIMCO 13,850 9,850 Suntrust Banks* 12,665 2,000 GS PWM* 11,175 5,580 Millennium Fixed Income* 10,000 9,000 Invesco 10,000 8,000 First New York Securities* 7,500 5,700 Waddell & Reed* 7,500 3,250 Eagle Asset Management* 7,000 500
Investor Orders ($000) Allotments ($000) BMO Global sset Management 6,000 1,000 Sterling Capital Management 5,000 345 Scudder* 5,000 2,750 Wilmington Trust Co* 5,000 - Brown Advisory* 5,000 5,000 Pioneer Investment Mgmt* 5,000 5,000 City National Rochdale* 4,475 1,150 CW Henderson 4,350 1,000 Definitive Capital Management* 3,000 2,000 Federated Investment Mgmt 3,000 3,000 Wells Capital Management 1,940 865 Prime Advisors 1,500 500 Ayco Asset Management* 1,495 1,440 Fiera Capital* 1,225 525 Payden & Rygel* 1,100 1,000 Aquilla* 1,000 1,000 Gentrust Wealth Management* 1,000 250 UBS Asset Management* 250 150 United Capital* 200 200 Retail Account 6,040 5,540
Total (New Investors) $217,395 $101,880 Total Institutional & Retail $863,205 $321,530 Stock $66,490 Total Par $388,020
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DTR Credit Ratings Affirmed Credit Positives Mature commuter toll facility with 35 years of traffic and toll revenue history Independent toll-setting ability and demonstrated willingness to raise toll rates to support debt service Relatively low toll rates for the service area that allow for expected future toll rate increases Strong management oversight by a professional management team Strong federal, state and local support with committed funding from highly rated jurisdictions Forecasted DSCR expected to remain above indenture requirements Liens adequately protected by cash flow and covenants No additional debt issuance planned for toll road capital needs or the Metrorail project
Other Comments Sluggish transaction and revenue growth necessitated a modest downward revision of the original 2014 Traffic
and Revenue Study Plan of finance for Metrorail debt relies on toll increases at five-year intervals Despite the back-loaded debt service profile and highly-levered nature of the asset, bondholders are protected by
strong bond indenture covenants and ample liquidity
Moody’s S&P
First Senior Lien A2 (Stable) A- (Stable)
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Total Par: $163,110,000
All-in True Interest Cost (TIC): 3.58%
Average Maturity 19.5 years
Refunded Par: $198,000,000
Refunding Par: $163,110,000 (par reduction of $34,890,000)
Total Priority and Retail Orders $1.2 billion
Total Subscription 7.6x
Over Subscription 6.6x
Gross Savings: $76,509,288
Present Value (PV) Savings: $47,963,778 PV Savings as a % of Refunded Par: 24.2%
Underwritten Amount: $0
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Series 2019A DTR Transaction Summary
DTR Investor Outreach to Create Demand 65 unique internet investor roadshow views 18 institutional investor meetings and calls 9 investors, who were directly marketed, placed orders totaling $461 million (6 of which
were new investors)
*New Investor 13
Investor Type of Contact
Series 2019A Bonds Orders
($000)
16th Amendment* Call 49,000
Blackrock Call 71,340
Boston Company* Meeting 11,000
Brown Advisory Call -
Capital Research Call -
Deutsche (Scudder) Call - Deutsche Asset Management Call -
Eaton Vance Meeting -
Fidelity* Call 83,815
Investor Type of Contact
Series 2019A Bonds Orders
($000)
JPM CIO Meeting -
JPM IM Call -
Loews Meeting -
Northwestern Mutual* Call 15,000
Old Orchard* Call 41,920
Standish Mellon Meeting 52,220
UBS Asset Management* Meeting 91,770
Vanguard Call 45,000
Wellington Meeting -
Nine of the Top 20 Dulles Toll Road Bondholders Placed Orders
Rank Investor Holdings ($000)
Series 2019AB Bonds Orders
($000)
1 Nuveen Asset Management 362,995 90,055
2 New York Life 211,381 -
3 BlackRock 209,330 71,870
4 Vanguard 143,824 116,870
5 Goldman Sachs 114,408 27,000
6 Franklin 107,145 30,000
7 MetLife 92,690 -
8 T. Rowe Price 80,410 53,500
9 Invesco 63,040 10,000
10 Hartford 60,000 -
*Source: Bloomberg
Rank Investor Holdings ($000)
Series 2018A Bonds Orders
($000)
11 Nationwide 45,497 -
12 Capital Research 45,350 7,000
13 Ameriprise 38,480 -
14 USAA 30,730 10,000
15 Manulife 28,075 -
16 Putnam 19,695 -
17 Fort Washington Investment Advisors
19,000 -
18 Guggenheim 18,859 -
19 Waddell & Reed 14,500 -
20 Dai-Ichi Life Holdings 13,600 -
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Total DTR Orders Were $1.2 Billion From a Total of 58 Investors, Including $668 Million From 30 New Investors
Investor Orders ($000) Allotments ($000) Vanguard Funds 116,870 14,395 UBS Global AM* 92,440 13,285 Nuveen Asset Management 90,055 13,250 Fidelity Investments* 83,815 30,790 Western Asset Fund* 77,115 Blackrock/MLAM 71,870 16,000 Millennium Fixed Income Ltd Fund 61,115 T. Rowe Price 53,500 16,000 Standish Mellon Asset Management* 52,605 6,600 16th Amendment Advisors LLC* 49,000 5,650 Old Orchard Capital Mgmt LP* 42,225 3,250 Northern Trust Company* 30,045 3,250 Franklin Fund 30,000 Merrill Arb 27,190 1,750 Goldman Sachs Asset Management 27,000 9,125 Jefferies ARB 25,000 1,000 Thornburg Investment Management 24,205 3,025 Boston Company* 21,000 1,000 Principal Global Investors* 20,000 Breckinridge Capital Advisors, Inc.* 17,190 2,500 M&I Investment Management* 17,000 Northwestern Mutual* 15,000 2,140 Spring Lake Asset Management* 15,000
Investor Orders ($000) Allotments ($000) Prime Advisors 12,385 Blue Mountain Capital Management, LLC* 10,000 Deutsche NY ARB 10,000 1,500 Invesco Power Share 10,000 1,500 Mizuho Securities 10,000 State Street Global Advisors 10,000 2,000 Susquehanna Capital Group 10,000 USAA Investment Management 10,000 1,500 Maritime Capital* 9,500 1,800 US Trust Corporation* 9,085 1,375 Gentrust Wealth Managment LLC* 9,000 1,500 RNC Genter Capital Mgmt* 8,805 700 Eagle Asset Management, Inc.* 6,100 750 Prudential Investment Management Inc. 5,000 2,000 Blackrock (BGI) 3,000 1,000 Liberty Banker Life* 3,000 500 Neuberger & Berman LLC 3,000 1,000 Other Investors 43,975 2,000 Retail Orders 2,725 975
Total New Bondholders $668,415 $76,540 Total $1,244,815 $163,110
*New Investor 15
Tax Exempt Yields Were Historically Low and Outperformed the 2018 Bond Pricing
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2.87%
2.33%
2.00%
2.50%
3.00%
3.50%
4.00%
30Y MMD 2018 Bond Pricing: May 31, 2018 Aviation Bond Pricing: June 4, 2019 DTR Bond Pricing: June 6, 2019
Refunding Savings History 2010-2019 Year Refunding Par PV Savings Gross Savings
2010 $594,225,000 $16,082,043 $30,116,910
2011 $422,050,000 $20,586,537 $27,520,553
2012 $311,825,000 $40,631,660 $77,001,280
2013 $165,615,000 $13,658,936 $39,991,533
2014 $432,445,000 $65,801,153 $111,524,513
2015 $453,635,000 $46,769,073 $70,468,851
2016 $386,025,000 $102,112,142 $166,716,990
2017 $334,465,000 $63,058,361 $116,582,074
2018 $356,675,000 $63,339,358 $81,534,325
2019 $154,695,000 $32,264,286 $36,658,616
Total Aviation $3,611,655,000 $464,303,549 $758,115,645 2019 DTR $163,110,000 $47,963,778 $76,509,288
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