BRADENTON, Fla. - The Georgia State Road and Tollway Authority today begins a two-day pricing of $600 million of federal highway grant anticipation and reimbursement revenue vehicle bonds.
The Garvee deal will be sold as $480 million of grant anticipation revenue bonds and $120 million of reimbursement revenue bonds, Series 2009-A. The bonds will be paid from federal highway trust funds received as reimbursements for state expenditures on federally approved highway projects or as grants paying for debt service on bonds issued to finance specific projects.
Bond proceeds will pay for congestion-relief transportation projects under the state's $15.6 billion Fast Forward program.
It is the largest bond sale of its kind since the GSRTA sold $600 million of Garvees in February 2008, according to Thomson Reuters. And it is part of the authority's planned issuance schedule.
That means it dodged some of the difficulties other transportation agencies experienced early last fall when similar deals were delayed by the market meltdown and the plummeting highway trust fund due to lower gas tax collections. With a thawing of the market and an $8 billion transfer to the trust fund in September, at least four Garvee deals have come to market since October.
GSRTA underwriters expect the deal to be well received by the market.
Like prior issues, this week's transaction is structured as serial bonds with 12-year final maturities to produce level debt service, said chief operating officer Terri Slack. The bonds are rated in the double-A category by all three major rating agencies.
"The relatively short maturities and high credit quality should make the issue attractive to retail buyers," Slack said in an e-mail, noting that the state's Garvee program is well established and a favorable sale is anticipated.
Unlike two prior issuances under the Fast Forward program, the Series 2009-A bonds will not be insured.
"Insurance would not be cost effective," said Slack. "The high credit quality of SRTA makes it difficult for insurers to offer a price that is economic."
Today's offering is the third issuance in the Fast Forward program, which is being supported by $3 billion in Garvees and $1.5 billion in state general obligation bonds. Triple-A rated Georgia sold $613.85 million of general obligation bonds two weeks ago, of which $130 million were earmarked for the Fast Forward program.
This week's bond sale has been rated AA-minus by Fitch Ratings and Standard & Poor's, and Aa3 by Moody's Investors Service. All three agencies place a stable outlook on the program.
Analysts said the federal aid highway program has an established track record and is expected to continue receiving funding, although it may experience continued decline in gas tax revenues that would require work on transportation projects to slow.
"We believe the rating reflects the strength of the Georgia Garvee program, including strong debt service coverage that we expect to remain sufficient during additional issuances, even if funding levels remain unchanged," said a statement by Standard & Poor's analyst Adam Torres.
The tollway authority is expected to sell $675 million of Garvees in 2010 and 2011, Torres said in a report.
Public Resources Advisory Group is the GRTA's financial adviser.
Barclays Capital is book-runner for this week's sale. Other underwriters on the deal are Citi, Banc of America Securities LLC, Jackson Securities, JPMorgan, Merrill Lynch & Co., Morgan Keegan & Co., Morgan Stanley, SunTrust Robinson Humphrey, Synovus Securities Inc., and Wachovia Securities.
Sutherland Asbill & Brennan LLP is bond counsel on the deal, Kilpatrick Stockton LLP is disclosure counsel, and Troutman Sanders LLP is underwriters' counsel.