DENVER -- Denver again postponed opening Denver International Airport, this time indefinitely, prompting Moody's Investors Service to indicate they may downgrade $3.5 billion in revenue debt today.

Moody's, which rates the debt conditional Baa1, said yesterday that the delay prompted it to place the credit under review for possible downgrade.

"The city's approach to achieving project completion to date has failed," Moody's said in a statement released yesterday.

"In today's announcement the city must assert the strong, proactive leadership necessary to overcome the technical and organizational obstacles that are causing the delay, and it must make clear that is is fully attentive to the security interest of its bondholders."

Standard & Poor's Corp. credit committee met yesterday on Denver International. "Once they choose their course of action [for funding the delay], we're going to have a response," said Phil Edwards, an analysts at Standard & Poors.

The agency, which rates the debt BBB, is expected to make an announcement today.

Standard & Poor's placed Denver International debt on CreditWatch with negative implications pending the planned May 15 opening.

Fitch Investors Service, which rates the debt BBB, said it would probably make a statement today.

Mayor Wellington Webb said yesterday that the project would be delayed indefinitely, that the city will hire a baggage system consultant, and that United Airlines has agreed to pay for its share of the delay costs up until three months. No other airline has made such a commitment yet.

"In good conscience ... I will not operate this airport if it is unable to meet our standards. I will not cause an embarrassment to this city." Webb said, adding that opening now "would be disastrous."

It costs the city about $31 million for every month the opening is delayed, before netting out $15 million per month in profits from Stapleton Airport operations.

Moody's said key elements in its rating decision are the airport's position regarding coverage of all the operating and debt service costs associated with the two Denver airports until Denver International opens, the status of the baggage system, and the airlines' response to the delay.

On the trading front, Denver airport bonds yesterday were off 1 to 1 3/8 points.

The benchmark 6 3/4% coupon, alternative minimum tax bonds maturing in 2022, dropped to a price of 89, yielding 7.70% yesterday morning.

One trader observed, "This is just a continuing saga of Denver Airport." But he added, "I think the smart money hangs on to it."

The trader said he saw some Denver Airport 7 3/4% bonds of 2021 trade at a yield of 7.65%, which was roughly 20 basis points higher than where they were at last week. Another trader said the bonds were trading at 7.70% bid, 7.65% offered.

A half dozen or so blocks ranging from $1 million to $5 million changed hands in the morning, a Denver trader said, but for the first time, institutions joined the sellers.

Previously, dealers specializing in retail trades had sold Denver airport bonds.

"[The bonds] are hanging in there pretty well," the trader said. "We're seeing some non-traditional buyers of airport bonds inquiring about them, trust departments, money manager. We'll see a little more heat. The key is what's the next move of the rating agencies."

"We haven't bought or sold today," Andrew Jennings, a vice president and manager of Franklin Advisers Inc.'s municipal trading desk, said prior to yesterday's announcement. "Everybody's waiting to hear what [the raters] have to say."

A myriad of problems with the $193 million automated baggage system surfaced in testing last Thursday and Friday.

The problems ranged from fouled up software programs to inaccurate scanner readings of computer coded baggage to individual baggage carts colliding and derailing on parts of the 22-mile track located beneath the airport's terminal and concourses.

The city will take a week to 10 days to evaluate a briefing by BAE Automated Systems Inc., the baggage system's builder and designer, on what it will take to make the system work.

Denver International is dominated by two airlines, United and Continental. Both concourses used by those airlines are served by automated systems, as is the third concourse, though to a lesser extent. Even though the concourses have backup conveyer systems, the airport cannot function without the automated system because the distances between the concourses and the terminal are too great. It would take too much time to transfer luggage.

Stephen Speer, United Airlines customer service manager, called Denver's decision "wise and courageous."

"It's absolutely the right decision," Speer said. "We intend to be a full partner with the city."

Dallas Belt, director of properties and facilities for the Western region for Continental Airlines and chairman of the baggage system committee, also pledged support by his airline and the committee without specifying the nature of that help.

"Continental strongly supports the decision by Mayor Webb and the city council," Belt said. "Obviously the baggage system is a vital element to the airport."

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