DALLAS — The Federal Highway Administration on Thursday closed on an $840 million loan that is a key component of the financial plan for the $2.5 billion bond-financed Grand Parkway Project toll road around Houston.
Grand Parkway Transportation Corp. will draw on the Transportation Infrastructure Finance and Innovation Act loan in December 2016 to partially refund its $733.46 million of subordinate tier toll revenue bonds that priced Feb. 5.
The bond anticipation note, which was rated SP1-plus by Standard & Poor's, was priced by Goldman, Sachs & Co. with a 3% coupon due Dec. 15, 2016 with a 0.65% yield.
The corporation also privately placed $107.5 million of taxable and $106.8 million of tax-exempt variable-rate debt with Bank of America Merrill Lynch & Co. The taxable portion of the privately placed debt will also be refunded with the TIFIA loan in 2016.
"The Grand Parkway Project is just the latest example of how DOT is using innovative programs like TIFIA to help states and cities pursue their transportation priorities," said Transportation Secretary Anthony Foxx.
Fitch rated the TIFIA loan at BBB-plus with a stable outlook. Standard & Poor's conferred its top SP1-plus rating to the BANs and rated the direct-placement debt AA-plus based on a toll equity loan agreement loan from Texas Department of Transportation. The outlook is stable.
If the TIFIA loan had been denied, Texas Department of Transportation said it would issue bonds to refund the debt due in 2016.
The Grand Parkway Corp. was created in 2012 by TxDOT to build the Houston beltway. It began work on the project with $2.9 billion of bonds issued in 2013, $973 million of which were refunded with proceeds from this week's sale.
TxDOT interim executive director and chief financial officer James Bass is president of the non-profit corporation, which has no staff. Grand Parkway's secretary treasurer is Benjamin Asher, the department's officer for innovative financing and debt manager.
The first 55 miles of the four-lane Grand Parkway toll road are under contract in northwest Harris County and southeast Montgomery County.
The parkway, which is also known as State Highway 200, will eventually consist of more than 180 miles encircling the greater Houston area. The road, which will include tolled and free segments, will cross portions of seven counties along its route from Galveston County to Baytown.
When completed, the Grand Parkway will be the longest beltway in the United States and the third and outermost highway loop around Houston.
Population in the region served by the Grand Parkway Project has increased about 6% a year for almost 20 years, said FHWA deputy administrator Greg Nadeau.
"Houston continues to grow and these improvements will help the region's mobility needs and further strengthen the region's economy," Nadeau said.
The first 15 miles of the toll road opened at the beginning of February on the west side of Houston. The toll for a one-way trip on the segment from Katy to Cypress is $2.88 for a passenger car.
The beltway's annual toll revenue is expected to total $46 million in 2016, rising to $415 million by 2035 and $922 million in 2054.
