San Jose Wednesday sold about $725 million in bonds - its largest debt issuance ever - to upgrade Mineta San Jose International Airport, said Finance Director Scott Johnson.
The bonds, which were sold mostly to large institutions in $5,000 increments, have maturities from 14 to 40 years and will cost the city an average of 5.3 percent in annual interest, he said.
San Jose had hoped to sell more like $767 million in bonds, which would have included about $40 million or so of refinanced prior debt. But Johnson said the interest rates that San Jose could have gotten on the refinancing portion would not have saved the city any money.
San Jose did very well considering the difficult bond-market environment, Johnson said. He said his advisers had told him the airport might have to pay an average 5.7 percent interest on the bonds because skittish investors were demanding higher rates in the wake of the meltdown in the subprime mortgage industry.
Johnson said the showing was "an indication of the city's strong credit quality."
He added that about $25 million of the bonds were bought by small "retail" investors and the rest by large institutions such as mutual funds.
