Connecticut will come to market this week with a $730 million negotiated sale of special tax obligation transportation infrastructure bonds, including a $130 million refunding.
Tuesday's one-day retail order period will precede the institutional sale, according to state officials. Raymond James is lead manager.
Connecticut's General Assembly established the special transportation fund 30 years ago as a dedicated fund for the financing investments in the state's transportation system and to cover the cost of operating the Department of Transportation and its services.
State transportation officials last December released their capital plan for 2014-2018. Major projects include the replacement of the I-84 Hartford viaduct, the Quinnipiac River bridge, or Q bridge, over I-95 in New Haven and improvements to the Bridgeport and New Haven rail yards.
Maturities will run from 2015 through 2034 for the $600 million new-money sale and from 2017 through 2025 for the refunding.
"The STO bond program is a well-established part of a comprehensive and legislatively authorized long-term transportation infrastructure program," said Fitch Ratings, which assigned its AA rating to the bonds.
A gross lien on pledged revenues and other receipts deposited to the state's special transportation fund secures the bonds.
"The bonds are secured largely by motor fuel and various other transportation-related revenues that have shown stability over time, with modest losses during the recession," said Fitch. "However, Fitch believes the revenue stream has limited growth potential."
Moody's Investors Service, which rates the bonds Aa3, said higher coverage levels or permanent separation of the special tax obligation from the state's general fund could push the rating up.
Potential downward triggers, Moody's added, would be a revenue falloff resulting in significantly lower debt service coverage; weakened local covenants; and a state GO downgrade.
Updike, Kelly & Spellacy PC is bond counsel. Lewis & Munday PC is co-bond counsel. Pulman & Comley PC and McKenna Long & Aldridge LLP are representing the underwriters.
The fund does not support Bradley International Airport. The Bradley Enterprise Fund finances the airport's operating and capital program for the airport in Windsor Locks, 12 miles north of Hartford.
