The Delaware River Port Authority last week approved additional management reforms as the agency looks to terminate $53 million of a $403 million derivative associated with its debt.
The bi-state agency in March refinanced $350 million of fixed-rate bonds into variable-rate mode to better match the debt with a floating-to-fixed-rate swap with UBS AG as counterparty. UBS last year exercised its right on the swaption, which took effect on Jan. 1.
The transaction left a remaining $53 million of the $403 million floating-to-fixed-rate derivative still attached to fixed-rate bonds.
The authority is now paying a fixed rate on the bonds and a fixed rate of 5.7% per the swap agreement, and receives 66% of the London Interbank Offered Rate from UBS, according to the official statement for the authority’s Series 2010D bonds, which priced in July.
John Hanson, the DRPA’s chief finance officer, said the authority is negotiating with UBS to end the $53 million swap and anticipates paying the bank $6 million to terminate the hedge.
In late December, the DRPA banned using derivative products in the future. It has paid during the past 14 months nearly $47 million to end two swaps, according to the OS.
The Port Authority oversees four tolled bridges that connect Pennsylvania and New Jersey.
It also manages the PATCO commuter line that runs from Philadelphia to southwestern New Jersey.
The DRPA’s board last week authorized resolutions that require vendors to disclose political contributions; prohibits commissioners, officers and staff from exerting undue influence; consolidates the corporate secretary position within the office of general counsel, and terminates the position of assistant to chairman of the board.
The approvals follow earlier board actions that called for new audits of the agency, the suspension of free E-Zpasses for employees and car allowances to senior staff, and banning the hiring of family members.
The DRPA has been under scrutiny following the disclosure of fiscal mismanagement and nepotism.