The Massachusetts Turnpike Authority can now use the state's appropriation pledge on an upcoming $800 million refunding deal after Gov. Deval Patrick yesterday signed into law a more than $2 billion general bond bill that will help finance capital improvements throughout the state.
Lawmakers included the proposal to grant MassPike the state's appropriation guarantee on the $800 million in the bond measure. MassPike officials anticipate refinancing the debt in the fourth quarter of 2008 and the state-appropriation pledge take affect on Oct. 1.
The new law also allows the commonwealth to extend its general obligation pledge on five floating-to-fixed-rate swaptions with UBS Securities LLC as counterparty. Ambac Assurance Corp. insures the swaptions, yet recent credit downgrades have dropped the monoline's credit rating to the double-A category.
Officials believe tagging the state's appropriation pledge, which is one notch below the commonwealth's double-A GO rating, onto $800 million of triple-B rated bonds will help MassPike obtain better pricing at market.
The measure also requires that all state bonding authorities must file bi-annual reports of their borrowing practices to the state's Finance Advisory Board, a five-member committee within the Office of Administration and Finance.
The authorities must detail all non-fixed rate bonding for the six months prior and include all transactions that involve derivatives with the terms and conditions of such agreements.