BRADENTON, Fla. – The Central Florida Expressway Authority won two rating upgrades ahead of a $149 million senior-lien bond advance refunding.
Moody’s Investor Service raised its senior rating to A1 from A2, a move it said was driven by the Orlando region’s expanding economy, population growth, and planned toll increases linked to the consumer price index.
S&P Global Ratings raised its senior debt rating to A-plus from A, also citing traffic and revenue performance that has exceeded forecasts and boosted debt service coverage to “levels we view as strong,” according to analyst Todd Spence.
“Although DSC will decline with new debt, we project it will remain at levels we consider strong,” Spence said.
The upgrades affect $2.57 billion of outstanding senior debt. Both Moody's and S&P have stable outlooks.
Moody’s also raised the rating to A2 from A3 on $193.7 million of outstanding junior lien bonds, and revised the authority’s outlook to stable from positive.
“The stable outlook reflects better than forecasted traffic and revenue performance and improved financial metrics in recent years that we expect will be sustained by continued economic expansion, assuming debt does not increase above the current plan,” said Moody’s analyst Maria Matesanz.
Like other issuers, the CFEA deal is headed for market prior to tax reform measures that, as proposed, would eliminate advance refundings.
The CFEA plans to price $149 million of advance senior lien refunding bonds on Dec. 5, according to Chief Financial Officer Lisa Lumbard.
Wells Fargo and JPMorgan are co-senior underwriters. PFM Financial Advisors LLC is the authority’s financial advisor. Broad and Cassel is bond counsel.
The 2017 bonds are being issued to refund the authority’s outstanding Series 2010A, 2010B and 2010C bonds for an estimated net present value savings of $13.4 million, or 8.17% of refunded bonds, without extension of final maturity, according to Moody’s.
The CFEA’s board adopted a $1.6 billion work plan earlier this year - the largest ever in its history - to fund capital and maintenance improvements over the next five years.
To finance a portion of the work program, the authority expects to issue $112 million of bonds in fiscal 2018; $238 million in 2019; $277 million in 2020; $70 million in 2022; $110 million in 2024; and $28 million in 2025.
The CFEA, formerly the Orlando-Orange County Expressway Authority, was expanded in 2014 to include Seminole, Lake, Osceola, Orange and Brevard counties.
The authority is an independent special district created by the Florida Legislature. It currently includes seven tolled expressways covering 118 miles.