Among major Build America Bond deals, the Metropolitan Washington Airports Authority in August paid $11.20 per $1,000 to a syndicate led by Citigroup and Morgan Stanley. This was for the first-ever issuance of a bond for the Dulles Toll Road, says Lynn Hampton, the chief financial officer, and was the standard fee at the time. It will be used to build a 25-mile extension to the Washington metro that will loop in the airport.
She said the banks worked with the agency for nearly a year before the bond issue. The deal included about $400 million in Build America Bonds, as part of a broader $963 million package. She said the Build America portion, despite the higher fees, were the lowest-cost part of the deal. The agency will pay 4.85% in interest after the subsidy.
Ms. Hampton says the financing helped create 59 jobs and retain 824 employees.
"We are able to move forward faster so the jobs are expedited," she says. "Otherwise, the jobs would eventually be there, but the project would have cost more and been delayed some."
As investors are growing more familiar with the bonds, fees are falling a bit. For less-complicated issues, such as general obligation bonds for states, the prices are lower.
Citigroup, for example, underwrote Build America Bonds for Maryland last month for $4.77 per $1,000. Citi declined to comment.
Washington Airports Authority's Ms. Hampton says she intends to float another Build America Bond deal in May, and expects the fees to be lower.
"Investors are really starting to like these things," she says.
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