Arkansas will pay a true interest cost of 1.62% on $225 million of grant anticipation revenue vehicle bonds priced in a competitive sale Sept. 11.
The Arkansas Highway Commission met Sept. 12 to accept the low bid from JPMorgan.
Nine bids were received for the first tranche of $575 million of Garvee bonds, which were authorized by voters in November 2011.
The current program is a continuation of an earlier effort financed with $575 million of Garvees approved by voters in 1999.
The bonds are supported by federal highway grants and a dedicated tax on diesel fuel.
Two more sales are scheduled before the current authorization expires at the end of 2015.
Financial advisor Dennis R. Hunt, senior vice president at Stephens Inc., told the commissioners that there was significant interest by investors in the bonds.
“This is an extremely attractive bond offering,” Hunt said. “There’s been incredible improvement in the bond market over time and obviously the state is benefiting from that.”
The state paid an average interest of 6.58% on several tranches of bonds from the 1999 authorization, the last of which will mature later this year.
Commission chairman R. Madison Murphy said Arkansas would pay $17 million less in interest costs for the new bonds than it did for debt issued for the initial program.
Scott Bennett, director of the highway department, said the first work contracts funded by the bond proceeds will be awarded in November.
Eventually, he said, the state expects to pay for 75 repair projects on 455 miles of interstate highways with the Garvee proceeds.
“It’s going to be hard to go anywhere on the Interstate system [in Arkansas] without seeing some construction,” he said.
