DALLAS - As expected, Fitch Ratings upgraded the Central Texas Turnpike System's senior revenue bonds to A-minus from BBB-plus after a $1.68 billion refunding that produced record interest-rate savings.
The Feb. 4 upgrade came as the Texas Department of Transportation, operator of the CTTS, closed on the refunding deal. TxDOT's governing board is the Texas Transportation Commission. The positive watch on the previous rating has returned to stable.
"The upgrade and removal of the rating watch reflects TTC's successful completion of its refunding," Fitch analyst Casey Cathcart said.
"The rating reflects TTC's commitment to support operating, maintenance and capital costs, a moderate reliance on revenue growth to break even, and a system supported by a strong and expanding service area," he noted.
Moody's raised its rating on the senior-lien bonds to A3 from Baa1 in advance of the deal.
The 2015 debt was issued to refinance $666 million of the commission's existing $1.675 billion first-tier debt and fully refund its $1.107 billion TIFIA (Transportation Infrastructure Finance and Innovation Act) loan.
Fitch affirmed its BBB ratings on $1.16 billion of second-tier bonds issued as Series C.
The January refunding was the first time CTTS had issued second-tier bonds, so those ratings were new. Standard & Poor's rated the second-tier bonds BBB-plus, while Moody's Investors Service applied its Baa1 rating.
At the Jan. 21 pricing, the CTTS achieved the greatest savings on a single bond deal in the state's history, officials said.
In terms of net present value, the savings came to $380 million, representing more than 21% of the amount of debt refunded, said Benjamin Asher, head of innovative financing and debt management for the Texas Department of Transportation.
