Triborough Bridge Agency Readies $196M Refunding Bond Sale

The Triborough Bridge and Tunnel Authority is scheduled to sell $195.6 million of general revenue variable-rate refunding bonds on Thursday by competitive bid.

According to a preliminary official statement, the TBTA, part of New York’s Metropolitan Transportation Authority and known commonly as MTA Bridges and Tunnels, looks to replace a letter of credit with Germany’s Landesbank Baden-Württemberg, which intends to cease such transactions in the United States.

The LOC will expire July 6. The TBTA is electing to remarket its 2005B-4 bonds as floating-rate notes, with the rate based on the one-month London Interbank Offered Rate plus an annual spread.

Standard & Poor’s, which rated the bonds AA-minus along with Fitch Ratings, said each of the five subseries has a separate remarketing date, with the first one (subseries 2005B-4a) occurring Jan. 1, 2013.

“However, there is no hard put, and if a failed remarketing occurs, the rates on the bonds would increase to 11%, but would be retained by the current bondholder then amortize evenly through maturity,” Standard & Poor’s analysts wrote. Remaining subseries each carry a similar structure.

Last month, Moody’s Investors Service downgraded the TBTA’s bonds to Aa3 from Aa2, citing stagnant economic recovery in the region as well as “low liquidity levels and lack of a debt-service reserve fund.”

Moody’s made the downgrade before the authority sold $250 million of bonds.

Fitch said the system has “a mature and stable traffic base with historically strong ratemaking ability.”

It also cited bondholder protection, noting that the structural subordination of MTA transfers, which has ranged from $300 million to nearly $500 million since 2004, enhances bondholder protections.

“The TBTA has experienced strong levels of financial flexibility through robust debt-service coverage levels, albeit lower than historical coverage levels,” Fitch added. Current levels are 2.5 times on the senior lien and 1.9 times on a combined basis, respectively, in 2011.

Lamont Financial Services Corp. is the financial advisor. Nixon Peabody LLP is bond counsel.

The TBTA operates seven bridges and two tunnels in the New York City area.

On Wednesday, the New York Senate confirmed Gov. Andrew Cuomo’s appointment of his predecessor, David Paterson, to the MTA board. Paterson was governor in 2009 and 2009 and did not seek re-election. Previously, he served in the state Senate for 22 years.

The board’s committees, including finance, will meet on Monday and its full board will convene two days later.

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Transportation industry New York
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