Airports Division Finances HNL Rental Car Facility at Record Low Rates

Work is underway on the consolidated rent-a-car facility (CONRAC) at HNL with construction scheduled to be complete in spring 2021 and opened in fall 2021 following tenant improvements. Photo courtesy Hawaiʻi Department of Transportation.

The Hawaiʻi Department of Transportation Airports Division successfully sold $194 million of taxable Airports System Customer Facility Charge Revenue Bonds on Wednesday, Aug. 14, 2019. The bonds were issued to finance the completion of the consolidated rent-a-car or CONRAC facility at the Daniel K. Inouye International Airport in Honolulu.

The HDOT Airports Division secured an all-in interest rate of 2.987% for the Series 2019A CFC Bonds, which translates into $37.5 million in debt service savings as compared to the Series 2017A CFC Bonds that had an all-in interest rate of 3.986%.

HDOT officials say nearly $8.5 million of this debt service savings was generated by lowering the initial pre-pricing all-in rate of 3.214% to the final pricing all-in rate of 2.987%.

The HDOT Airports Division received over $1.2 billion in orders for the bonds, leaving the transaction six times oversubscribed. Because the demand for bonds was so strong, the underwriters were able to reduce interest rates significantly from the initial offering levels.

The credit rating agencies (Moody’s, S&P and Fitch) affirmed the ratings of the bonds, of A2/A+/A, respectively. These are among the highest ratings that each respective rating agency has given to any rental car facility in the nation. All three rating agencies also assigned “Stable” outlooks to the Bonds.

Bank of America Merrill Lynch served as the lead underwriter and Morgan Stanley served as the co-senior manager. Katten Muchin Rosenman served as the Airports Division’s Bond Counsel.

Honolulu CONRAC construction is scheduled to be completed in the spring of 2021, followed by the tenant improvements and the grand opening to the public in the fall of 2021.

The Honolulu facility comes following completion of a CONRAC facility on Maui earlier this year.