Case Studies

  • Virginia Port Authority

    Development of Plan of Finance / Capital Markets Transaction Advisory 

    Since being selected as financial advisor more than eight years ago, PFM has helped the Virginia Port Authority, the third largest east coast port, issue over $557 million of debt.  Like most seaport credits, VPA’s Terminal Revenue Bond credit can be significantly impacted by changes in national and global economic conditions.  Aside from outside market factors, VPA can control several other credit factors such as management and its debt.  PFM has assisted VPA in setting policies and practices related to management and debt that ensure sound credit ratings.  Since PFM was hired as VPA’s Financial Advisor, the Terminal Revenue Bond rating increased from A1 to Aa3 by Moody’s and from A to A+ by Standard & Poor’s.  Throughout the turbulent financial markets experienced over the past few years, the demise of the bond insurers and severe economic conditions, we have helped VPA manage its credit story and have guided the Authority through a successful sale of Terminal Revenue Bonds in 2010 and a negotiated sale of Port Fund Revenue Bonds in 2011.  

    PFM provides the VPA with a broad range of financial advice, including advice on its debt, investments, public private partnerships and its long term strategic development and capital improvement plan.

    A sample list of financial advisory services that PFM has provided to VPA is provided below. 

    • PFM performs an on-going analysis of VPA’s debt capacity under each of its borrowing programs and works to identify innovative financing structures that will support VPA’s business objectives. 
    • VPA’s 2040 Master Plan, a projection of the Authority’s capital improvement program through the year 2040, is updated and adjusted at least annually in response to projected demand, evolving market circumstances, and most recently, proposed privatization proposals.  Each time the 2040 Master Plan is updated, PFM assists by analyzing the cash flows and optimizing the associated funding sources. 
    • PFM assisted VPA in issuing its Commonwealth Port Fund Revenue Bonds Series 2011 bonds in the summer of 2011 which were issued to help finance the costs of the Craney Island Eastward Expansion.
    • In 2010, PFM assisted VPA with the permanent refinancing of the latest Bond Anticipation Note, originally issued in 2009.  The note was refinanced over 30 years with long-term fixed rate Terminal Revenue bonds.  VPA took advantage of the AMT holiday created by the American Recovery and Reinvestment Act and sold the series 2010 Bonds on a non-AMT basis.
    • In 2009, PFM assisted VPA with the issuance of $65 million in Bond Anticipation Notes, which are secured by a subordinate lien on VPA’s terminal revenues.  These notes, which had the highest short-term note ratings, carried a low interest rate of 0.72%. PFM previously helped VPA on a similar $65 million Bond Anticipation Note issuance in 2008 which saw equal success in the municipal marketplace, carrying a low interest rate of 2.13%.
    • Based on the success of the Master Equipment Lease Program (“MELP”) that PFM helped VPA establish in 2003, VPA created a second MELP in 2007 when the funds available under the first program were fully utilized.  PFM helped VPA to structure the transactions to fit within its existing terminal revenue bond program and address the complex and myriad issues associated with the lease financing of equipment constructed by overseas manufacturers. The leases under the program are secured by a purchase money security interest in the equipment and a subordinate pledge of terminal revenues. This structure was favorably received by the lease market and attracted five to seven proposals from the major players in the lease industry.  The original $45 million MELP established in 2003 was the first of its kind for VPA and they have since used the program to finance a mix of equipment including reachstackers, container cranes and straddle carriers over terms ranging from five to fifteen years.
    • PFM helped the Authority secure a winning insurance bid on its 2006 Terminal Revenue Bonds that was over 56 basis points better than the previous bid in 2003. This generated estimated savings of $1.155 million.  PFM was instrumental in assisting VPA through its credit process, which led to two upgrades in 2006 and in engaging the bond insurers.
    • PFM helped VPA execute three series of its Commonwealth Port Fund Bonds totaling $81.730 million in 2005.  The CPF bonds are backed by a portion of revenue collected by the Commonwealth of Virginia Transportation Trust Fund and are rated Aa1/AA+/AA+.  Two of the series provided funds for capital projects while the third consisted of a forward refunding. 
    • In March 2005, PFM helped VPA adopt a forward-looking derivatives policy.  This policy gives VPA staff the flexibility to consider and implement financing strategies such as interest rate swaps provided the risks are appropriately mitigated and the benefits outweigh those available by traditional means.  PFM has periodically analyzed the estimated savings associated with derivative products on VPA’s outstanding debt. 
    • In November 2005, VPA adopted a variable rate debt policy.  Like the derivatives policy, this document provides a framework that VPA can use to guide its potential future use of new financing strategies.
    • Upon being hired in 2003, PFM had less than two months to complete a $55.1 million Port Facilities Revenue Bond transaction secured by terminal revenues. PFM integrated efficiently with VPA’s existing financing team to quickly bring this transaction to market.  PFM assisted VPA in conducting rating agency meetings, amending the bond resolution, securing a commitment for bond insurance and ensuring that the Alternative Minimum Tax (AMT) revenue bonds were priced equitably in a volatile market.

    PFM plans to continue assisting VPA with the establishment and implementation of prudent fiscal management practices and to develop and execute effective strategies for debt issuance in the seaport credit market. With PFM’s ongoing support as its Financial Advisor, VPA is positioned not just to weather, but thrive in today’s unpredictable and volatile municipal marketplace.





    These materials are based on factual information from actual projects that The PFM Group of companies has engaged in for a client. They are for general information purposes only and are not intended to provide specific advice or a specific recommendation. The results of individual projects will vary significantly depending upon the size and structure of each transaction, permitted investments, prevailing market conditions at the time of the transaction, and other events or circumstances beyond our control. Past performance does not necessarily reflect and is not a guaranty of future results. The information contained in these case studies is not an offer to purchase or sell any securities.