Favorable Ratings Assigned to Bonds for Airport Project

Moody’s Investors Service assigned an A1 rating Thursday to $235 million in revenue bonds for construction at the John Wayne Airport.

Earlier this week, Standard & Poor’s assigned the bonds a slightly lower A-minus rating.

The ratings by the nation’s largest credit rating agencies bolstered airport boosters’ contention that there will be continued great demand for air travel in Orange County, guaranteeing the financial success of the airport.

Moody’s and S&P; issued ratings that were, however, at the bottom of their A, or “investment grade,” scales because of the scope of the project. Still, the generally positive ratings will allow Orange County to issue the bonds at a less expensive interest rate.

The effect of the ratings, received with “pleasant surprise” by airport manager George Rebella, won’t be known until the bonds are priced, which could come as early as next week. But each rating point from Moody’s could be worth one-twentieth to one-tenth of a percentage point on the rate of the 30-year serial bonds, according to William Lippman, a vice president at Smith Barney, Harris Upham, underwriter of the bonds.

Proceeds from the bonds, the first to be issued in the history of the airport, will be used to build a new terminal and 8,400-space garage. Construction is scheduled to begin early next year.

The strength of the Orange County market and demand at the airport indicate high net revenue in the future, which provides assurance of the bonds’ safety, said Val Hendy, an analyst at Moody’s.

“They’re practically rebuilding the whole airport,” which causes concern about construction delays and increased costs, said Todd Whitestone, a senior vice president at Standard & Poor’s.

A noise abatement program that limits the number of commercial jet departures was also a factor in the rating because the airport will never achieve its full commercial potential, Whitestone said.

The bonds might be issued as early as next week, according to Sara Walker, associate administrative officer of Orange County.