WASHINGTON - Two Virginia authorities will price a total of more than $200 million of bonds in separate negotiated deals over the next week.
The Virginia Resources Authority will price $81 million of bonds in a pool deal on behalf of 13 local issuers on July 12. About $51 million of them will be infrastructure revenue bonds that carry a triple-A rating from both Standard and Poor's and Moody's Investors Service, and are secured by payments from 13 local issuers. Another $24 million will be moral obligation bonds rated AA by Standard and Poor's and Aa2 by Moody's, and will also be backed by the local issuers. The remaining $6 million will be private activity bonds that are subject to the alternative minimum tax. The deal will close Aug. 2.
The bonds will be used to refund VRA bonds related to local infrastructure projects, including such necessities as wastewater treatment and recycling, said Suzanne Long, VRA's executive director. The largest will be an $11.2 million refunding of a 2002 water system issue for Gloucester County.
The VRA executed a larger pool deal in May, when it priced $350 million. Long said the agency, which has no taxing power, periodically reaches out to local authorities. Since its creation in 1984, the VRA has financed some $4.2 billion of projects throughout the commonwealth.
"We contact people who look like they have some savings, and ask them if they want to go to market," she said.
Raymond James/Morgan Keegan will serve as lead underwriter on the deal, along with JPMorgan, Morgan Stanley, and TD Securities. Richmond-based McGuireWoods LLP, where Long once practiced, will serve as bond counsel.
In addition, the Commonwealth Transportation Board will sell $125.5 million of grant anticipation revenue bonds less than a week later, with a retail only-period on July 16 and an institutional period the following day. The Garvee bonds carry ratings of AA from Standard and Poor's and Aa1 from Moody's. They are backed by anticipated revenues from the newly-reauthorized highway trust fund. The trust fund was going bankrupt until a new two-year $105 billion transportation bill signed into law by President Obama last week made allowances for transfers from the general fund to the highway fund. Standard and Poor's and Moody's both released reports lauding the credit-positive impact the new law would have on Garvees. Virginia has received an average of $757.4 of trust funds for use for bond payments from 2005-2011.
The CTB, governed by a 17-member board headed by Virginia Secretary of Transportation Sean Connaughton, will use the proceeds to pay for two of the commonwealth's highest-profile transportation projects: the Interstate 95 HOV/HOT lanes project in Northern Virginia and the Downtown Tunnel/Midtown Tunnel/Martin Luther King Freeway Extension Project in the Norfolk area. Both projects are public-private partnerships.
Citi and Bank of America Merrill Lynch will be lead underwriters, and McGuire Woods will be the bond counsel.
The CTB deal will close on July 25.
