$2B Debt Restructuring Positions The Calgary Airport Authority for Predictable Future
The Calgary Airport Authority has restructured its debt in a move that will provide stability and certainty to support YYC Calgary International Airport as a vital hub for economic growth for Calgary and the surrounding region.
The authority completed its inaugural bond offering on Oct. 7, raising $2.075 billion of private placement bonds that will be used to repay two-thirds of the authority’s debt with the Province of Alberta, pay transaction costs, and for general corporate purposes.
The issuance was significantly oversubscribed with over $9 billion in orders, attracting the largest total order books of a bond offering ever in Canada. It was also the largest inaugural bond offering by a Canadian issuer, demonstrating investor belief in the strategy and future of YYC.
“The reaction to this inaugural bond offering represents confidence in YYC and its future,” said Bob Sartor, president and CEO of The Calgary Airport Authority. “The certainty provided by this move will sharpen management’s focus on long-term planning from a capital, operations, and growth perspective.”
The authority chose to access the market at this time to:
• Extend its debt maturity schedule and better align with the cash flow profile of the underlying asset,
• Reduce interest rate risk by issuing long-term, fixed rate debt,
• Diversify lenders and reduce dependency on a single lender, and
• Leverage favorable market conditions.
“We have established a deep and broad base of high-quality institutional investors that complements the continued support of the Province and serves as a source of funding for future capital needs,” said Robert Palmer, vice president, Commercial, Strategy & chief financial officer of The Calgary Airport Authority.
The joint leads and joint bookrunners on the issuance were CIBC World Markets Inc., RBC Dominion Securities Inc., and Scotia Capital Inc. and the co-agents were BMO Nesbitt Burns Inc., and TD Securities Inc. Blakes Cassels & Graydon LLP represented the Authority for the transaction.
Quick facts:
• YYC is one of the busiest airports in Canada. In 2019, 18 million passengers passed through the airport.
• YYC had the highest percentage of connecting flights in Canada prior to the pandemic and is one of the top connecting airports in the world.
• YYC had the lowest cost per passenger among tier 1 airports in Canada in 2020.
• YYC handles 75% of Alberta’s air cargo shipments. During 2020, cargo landings grew by 11%.
• The Calgary Airport Authority generates revenue through aeronautical revenue (landing fees, parking fees, usage fees for terminals/gates, etc.), terminal space rentals such as retail, car parks and food and beverage outlets, and airport improvement fees that go toward new infrastructure and major improvements, including associated debt.
