Bill introduced to refinance airport bond, reduce debt payments

A.B. Won Pat International Airport (file photo)

With a sustained reduction in enplanements—from 5,000 per day to 5,000 per
month—continuing to impact the financial position at Guam’s only commercial airport, Senator Joe S. San Agustin has introduced Bill No. 429-35.

If enacted, the measure would authorize the A.B. Won Pat International Airport Authority, Guam (GIAA) to take advantage of favorable interest rates to refund all or a portion of General Revenue Bonds, 2013 Series’ A, B, and C for debt service cost reductions.

“Our airport is the gateway for all our residents and visitors to Guam.” stated Senator San
Agustin in a news release. “While the GIAA has achieved considerable cost-cutting in operating expenses and continues to look at ways to further reduce their spending, we need to ensure that our airport can bridge the gap between now and when tourists are able to visit Guam safely again.”

GIAA has stated that it has reduced operating expenses in FY 2020 by nearly 20% and has
continued such reductions into FY 2021. With $30 million in airport revenue losses in FY 2020, the funding provided by the CARES Act coupled with operational expense reductions helped to sustain airport operations. With only about $6 million remaining in CARES Act funding this fiscal year—and the uncertainty of full recovery in FY 2021—the ability to achieve further reduction in debt service costs is warranted.

While GIAA may also choose to restructure certain portions of its debt to realize immediate debt service cost reductions up-front and smooth out its existing debt service payments, the senator noted that such restructuring will continue to require no less than a 2% net present value savings and would not extend the existing maturity of its debt.

“GIAA is the island’s economic engine and community lifeline. I thank my colleagues that
agreed to co-sponsor this legislation and hope to provide this authorization to the airport as
soon as possible so they can begin this process toward financial recovery,” San Agustin said.