LOS ANGELES — Oregon priced $410 million of revenue bonds for the state's Department of Transportation a day early Tuesday, after receiving strong demand from investors.

The deal was originally scheduled to price on Wednesday, following Tuesday's scheduled retail order period.

"The transaction was very well received by both the retail and institutional parts of the market, which allowed us to tighten spreads a bit across the yield curve and price the whole deal in one day," said Laura Lockwood-McCall, director of the debt management division in the State Treasury. "The State of Oregon is very pleased with the results, as the all-in [true interest cost] on this 25 year deal came in at approximately 3.94%."

Joint senior managers Morgan Stanley and Citi priced the deal with yields ranging from 0.15% with a 2% coupon in 2014 to 4.17% with a 5% coupon in 2038.

"The bonds will fund a number of congestion-reduction projects around the state that were authorized in 2009 by the Legislature through the Jobs and Transportation Act," said Lockwood-McCall. "To a great extent, the work on many of these projects is already done, and was cash-funded, so now we are reimbursing ourselves with bonds so that we can take on other transportation projects."

The act authorized Oregon's DOT to issue up to $840 million of bonds to finance transportation projects. The department expects to issue the remaining bonds during calendar year 2015.

As of Sept. 1, 2013, the DOT had $2.1 billion in outstanding debt, including $1.82 billion of fixed-rate debt and $265 million of variable-rate debt.

About $1.25 billion is senior-lien debt, and $835 million is subordinate-lien debt.

The bonds will amortize over 25 years in order to produce annual level debt service, Margie Backstrom, an executive director at Morgan Stanley, said during the roadshow for the deal. Maturities range from 2014 through 2033, and a term bond maturing in 2038.

The bonds will be payable on a senior-lien basis from pledged revenues allocated to the State Highway Fund, and will not constitute a general obligation of the state of Oregon.

Lockwood-McCall said during the roadshow that the State Highway Fund has a balanced and diversified revenue base that consists of three sources: a motor vehicle tax, fuel tax and motor carrier fees.

The Jobs and Transportation Act will generate around $281 million in annual new revenues from increased fees and taxes, which were fully implemented in January 2011, she said.

Moody's Investors Service assigned the bonds its Aa1 rating, with a stable outlook, citing the DOT's diverse and stable pledged revenue stream, which is constitutionally allocated to the State Highway Fund, as well as its strong additional bonds test of three times debt service.

Fitch Ratings assigned an equivalent AA-plus, also citing strong revenues and debt service coverage. Fitch noted that the rating is sensitive to the performance of pledged revenues, which have limited growth potential.

Standard & Poor's gave its highest AAA rating, with a stable outlook.

Bond counsel is Orrick, Herrington & Sutcliffe LLP and the financial advisor is Public Resources Advisory Group.

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