DALLAS — The Central Texas Regional Mobility Authority, one of two toll road operators in Austin, expects healthy savings in a $368 million refunding of bonds issued just five years ago.
"We thought we had a pretty good deal then, and rates are even lower now," said Bill Chapman, chief financial officer for the CTRMA.
The agency's parameters for refunding require savings of 6.5%, Chapman said. But actual savings are likely to be much higher.
The bonds are expected to price Thursday through book runner JPMorgan, with executive director Douglas Hartman as lead banker. Richard Ramirez, managing director at First Southwest Co. is financial advisor.
The bonds are rated BBB-plus by S&P Global Ratings and Baa2 by Moody's Investors Service. Outlooks are stable.
S&P also upgraded its rating on CTRMA's 2015C subordinate Transportation Infrastructure Finance and Innovation Act bonds to BBB-plus from BBB.
"The upgrade reflects the provisions that allow for the subordinate TIFIA loan to spring to become par with senior obligations," S&P analyst Todd Spence wrote. "Although we view this as unlikely, the provisions caused us to equalize the rating with that on the senior debt, consistent with typical treatment of loans with this feature."
Moody's noted the Austin area's strong economy, revenue growth at or above forecasts, satisfactory debt service coverage and toll rate increases based on the consumer price index.
"These factors help mitigate construction and ramp-up risks associated with the more than doubling of debt for the new 183 South Bergstrom Expressway Project," Moody's analyst Maria Matesanz wrote. "We note that the debt service to finance this project escalates steeply from 2020 to 2030, and it is expected that traffic and revenue from the new toll road and the existing 183A and 290 components will grow ahead of debt service requirements."
CTRMA issued $368 million of toll revenue bonds last November for the 183 project that were oversubscribed by a factor of 10, Chapman said.
Toll road bonds appeal to investors seeking higher yield in a low-rate environment, he said.
Horatio Porter, chief financial officer at the North Texas Tollway Authority in the Dallas area, concurred. NTTA met strong demand for $993 million of refunding bonds last week.
"Overseas, they're paying negative interest rates," Porter said. "Those bondholders need some place to put their money. We're a very attractive credit."
Porter said the savings on its refunding were so great that the NTTA was able to reduce its maximum annual debt service by $35 million to $576 million.
"The MADS used to be well over $700 million," Porter said.
Chapman said investors in CTRMA are likely to expect higher yield than they saw in the NTTA deal because of CTRMA's lower credit rating. NTTA's bonds were rated A1 by Moody's Investors Service and A by Standard & Poor's with stable outlooks.
Through March 2016, CTRMA's transactions are up 15.6%, and toll revenues are up 36.9% over the same period in fiscal year 2015.
CTRMA's system includes two operational toll roads, U.S. 183A and a section of U.S. 290. The 183A toll road was completed on time and within budget in April 2012. The authority also completed construction of U.S. 290 East, a 6.2-mile toll road that connects to 183 on schedule and within budget. Toll collections on U.S. 290 began in January 2013.
CTRMA toll tags also operate on the Central Texas Turnpike System created by the Texas Department of Transportation. The CTTS operates four toll road segments in the Austin area.
