$1.4 Billion Refinancing Improves Long-Term Debt Structure for 73 Toll Road

TCA Spring 2011The San Joaquin Hills Transportation Corridor Agency has successfully refinanced $1.4 billion of its $2.2 billion in outstanding debt issued to fund construction of the 73 Toll Road.

“This is great news for drivers and the communities that surround the 73 Toll Road,” said Scott Schoeffel, Chairman of the San Joaquin Hills Transportation Corridor Agency, the joint powers authority responsible for financing the 73 Toll Road. “Refinancing improves the agency’s long-term financial health by lowering the annual debt service payments and improving financial flexibility.”

The bond issue was well received by the market with $2.5 billion in orders for a bond issue sized at $1.4 billion reflecting the 73 toll road’s performance, rating upgrade and confidence in the credit profile.

By taking advantage of the current low interest rates, and selling bonds with a nominal maturity of 2050 compared to the current 2042, the annual debt service growth is reduced from 8.8 to 1.7 percent over the next ten years. The interest rate on the restructured bonds averages 4.74 percent. The previous average was 5.72 percent – a reduction of nearly 100 basis points.

5809896002_b3709940fd_z“The combination of low interest rates, improved credit rating, and strong investor response resulted in a net present value savings of $44 million,” said Amy Potter, Chief Financial Officer for the Transportation Corridor Agencies.

“With this new long-term sustainable debt structure and conservative growth outlook for the 73 Toll Road, the agency will have greater financial flexibility moving forward which may allow the agency to moderate future toll rate increases, withstand economic downturns and potentially pay off the debt ahead of the 2050 final maturity date,” said Michael Kraman, Chief Executive Officer for the Transportation Corridor Agencies.

The sale is scheduled to close in early November and consisted of:

  • $1.1 billion in tax-exempt Senior Lien Current Interest Toll Road Revenue Bonds, with a 1.3-times coverage ratio requirement.

  • $300 million in tax-exempt Current Interest Junior Lien Toll Road Refunding Revenue Bonds, with a 1.1-times coverage ratio requirement.

Standard & Poor’s and Fitch Ratings have rated the agency’s Senior Lien Bonds BBB- and the Junior Lien Bonds BB+. Both ratings are higher than the agency’s previous ratings.

Posted on October 23, 2014, in Uncategorized and tagged , , , , , , , , , , , , , . Bookmark the permalink. Leave a comment.

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