BRADENTON, Fla. — The Orlando-Orange County Expressway Authority in central Florida expects to be in the market today with retail pricing of up to $375 million of revenue bonds.
The authority opted not to use taxable Build America Bonds due to concerns over relying on the federal subsidy as well as additional reporting and audit requirements.
The deal represents the first of four tranches supporting a five-year, $1.4 billion transportation plan that will be largely funded with debt.
The OOCEA will use proceeds of the fixed-rate tax-exempts along with system revenue to pay for construction projects valued at $390.8 million, including road widening, the purchase of rights of way, and building express-toll plazas.
The deal's book-runner, JPMorgan, and a syndicate of nine underwriters will complete the sale to institutional investors tomorrow.
The authority is offering a plain-vanilla transaction structured with serial and term bonds and maturities between 2025 and 2040. Insurance is being considered but depends on the cost-benefits at pricing, according to Nita Crowder, OOCEA's chief financial officer.
She said BABs are not being used because the agency's board members have concerns about relying on the subsidy as well as the additional reporting and audit requirements. Crowder added that the deal has good prospects for attracting investors.
"It's a great week to be in the market," she said. "There's relatively low volume out there and the yields are coming in pretty good."
To support the construction plan, the OOCEA is planning to sell a second tranche of approximately $324 million of revenue bonds in January, followed by issuances of around $300 million each in 2012 and 2013.
The spending plan is based largely on the board's vote a year ago to implement a 25-cent base toll increase with future increases linked to the consumer price index. The plan aims to shore up the authority's credit position, compensate for a reduction in traffic due to the depressed economy, and to move forward with priority projects, officials said.
The OOCEA maintained ratings of A by Fitch Ratings and Standard & Poor's, and A1 by Moody's Investors Service for this week's sale. Fitch and Standard & Poor's kept stable outlooks on the rating.
Analysts cited the toll increase as a positive factor. However, Moody's revised its outlook to negative from stable to reflect the impact of the recession as well as the new capital-program debt and risks associated with "substantial" exposure to variable-rate debt and derivatives.
With this week's sale, OOCEA will have around $2.45 billion of outstanding bonds. Out of that, $999 million, or 40.6%, is variable rate with swap agreements, according to a report by Moody's analyst Maria Matesanz.
The authority maintains a swap reserve of $80 million and had more than $150 million in other unrestricted reserves as of January, said Matesanz, who also noted that the current mark-to market valuation on the authority's swaps is "substantial at negative $146 million."
First Southwest Co. is financial adviser to the expressway authority.
Members of the syndicate offering the bonds this week are Bank of America Merrill Lynch, Barclays Capital, Citi, Goldman, Sachs & Co., Loop Capital Markets LLC, Morgan Stanley, Raymond James & Associates Inc., RBC Capital Markets, and Wells Fargo Securities.
Broad & Cassel and Cesery Bullard PA are co-bond counsel. Greenberg, Traurig PA and KnoxSeaton are co-disclosure counsel. Bryant Miller Olive PA is underwriters' counsel.
