The Port Authority of New York and New Jersey plans to competitively price $300 million of tax-exempt bonds today in what it expects to be its last bond offering of the year.
The agency plans to market its 161st series of consolidated bonds as serials and-or term bonds, with the longest maturity in 2039.
Last year the authority adopted a $6.71 billion 2009 budget that included a record $3.3 billion of capital spending, of which $1.83 billion was to be financed through bonds or notes. Today’s deal will bring the authority’s issuance this year to $1.64 billion, according to Thomson Reuters.
The Port Authority’s capital spending is now expected to be lower this year, totaling $2.52 billion, according to a preliminary official statement.
It attributed the reduction in spending to lower-than-anticipated expenditures on various capital projects, including the redevelopment of the World Trade Center and the Access to the Region’s Core project, which is enlarging a tunnel under the Hudson River. The Port Authority has $12.84 billion of debt outstanding.
In light of the economic downturn, the agency is currently reviewing their $29.5 billion 2007-2016 capital plan.
“Depending on the duration of the current recession and the time frame of an economic recovery in the New York-New Jersey region, it may be necessary to take further steps to increase revenues, reduce operating costs, and defer capital projects,” the POS stated.
Spokesman Steve Coleman said that any revision of the authority’s capital program would be considered in December when it adopts its 2010 budget.
“They have some discretion on which projects they undertake, which ones are core projects they are going to move forward with ... versus some other projects that could be deferred if their revenues don’t come in as strong as they had projected or if demand isn’t there to warrant undertaking some of these projects,” said Moody’s Investors Service analyst Maria Matesanz. “They’re constantly looking at their program and figuring out what makes sense and what doesn’t.”
The authority operates four airports in the metropolitan region, commuter rail, bridges, tunnels, maritime ports, a bus terminal in Manhattan, and owns the World Trade Center site.
Use of its assets has fallen due to the recession and has cut into its revenue, according to the POS. Annual revenue this year is projected to fall to $3.59 billion, $190 million less than budgeted.
“It’s something were seeing across all of the infrastructure sectors in terms of transportation, passengers at airports, traffic on the toll roads” Matesanz said. “The Port Authority’s traffic is not as far down as many others, which speaks to the resiliency and dominance they have over transportation networks in this metro area.”
Moody’s rates the bonds Aa3 with stable outlook.
Standard & Poor’s and Fitch Ratings both rate the bonds AA-minus with stable outlook.
