DALLAS — Colorado's E-470 Public Highway Authority this month will remarket $72.6 million of variable rate revenue bonds subject to mandatory tender on Sept. 1.

The series 2014A bonds' interest rate will be tied to the SIFMA Index with a three-year term. The new bonds will convert series 2011A.

The 2014A bonds, expected to go to market the first week in February, are rated BBB by Standard & Poor's, Baa2 by Moody's Investors Service, and BBB-minus by Fitch Ratings. Outlooks are stable.

The authority has $1.59 billion of debt outstanding, according to Moody's, and plans to pay down about $78.6 million in debt with funds on hand in 2015.

Under the authority's 1997 indenture, pledged revenues include income from the 47-mile toll road system, net vehicle registration and highway expansion fees, governmental loans, and interest earnings.

Debt service on the revenue bonds is paid from the trust estate after the payment of operating expenses and after the application of vehicle registration fees to pay debt service on the authority's VRF bonds.

"We view some legal provisions as weak," said S&P analyst Todd R. Spence, "specifically one that allows additional debt to be issued based on debt service coverage of projected future revenues."

The state E-470 authority was established in 1988 to build the tollway to connect Colorado 470 in Denver's booming southern suburbs to the eastern perimeter of Aurora and Denver International Airport.

Despite sensitivity to economic cycles, traffic is now above the previous peak fiscal year 2007 level following 3.6% transaction growth in FY 2012 and another 8.2% in FY 2013 to 58.4 million, according to Fitch Ratings.

"A favorable elasticity of demand and continued and sustained traffic growth will be necessary to meet the authority's escalating debt service profile in the next 6-12 years," said Fitch analyst Jeffrey L. Lack.

An updated traffic and revenue study on the tollway is due this year, analysts said.

"A realistic, sustainable positive forecast trend could support a change to a positive outlook," wrote Moody's analyst Maria Matesanz.

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