DALLAS — The North Texas Tollway Authority received more than $3 billion of orders for $866.5 million of toll revenue refunding bonds that priced Wednesday, providing net present value savings of nearly $90 million or 10%.
"There was a tremendous amount of demand for the NTTA credit," said Horatio Porter, chief financial officer for the authority. "The investment community is very interested in what is going on with NTTA. Growth in the North Texas area continues to gain momentum."
Demand for the debt was strong among institutional and retail investors, Porter said.
"With a deal of this size it represented an opportunity for many different investor groups to participate," he said.
The $243 million of gross savings translates to about $90 million or 10% of NPV savings, better than Porter and the financial team's expected 7% savings target.
Maturities in 2038 earned a yield of 3.62% and were oversubscribed five times, Porter said.
"In addition to achieving some very impressive net present value savings, this issue allowed us to reduce our maximum annual debt service by about $80 million," Porter said.
As a result of this deal, coverage ratios on second-tier toll revenue bonds will improve to 2.3 times from the previous 2.0 times, he said.
The issue is rated A3 by Moody's Investors Service and BBB-plus by Standard & Poor's.
Douglas Hartman, executive director at JPMorgan, was lead banker on the deal. Loop Capital Markets was co-senior manager with five co-managers.
First Southwest Co. senior vice president Ron Davis is NTTA's financial advisor. McCall Parkhurst & Horton and Mahomes Bolden are co-bond counsel.
"We're pretty pleased with the financial advisor, and the syndicate has done an outstanding job," Porter said.
This refunding came six months after a $463 million refunding of first-tier revenue bonds that produced NPV savings of 11%. That was the second refunding of 2014, which produced combined savings of $85 million.
Porter said the April 8 savings were the highest since he came on board as CFO two years ago after running the finance department at the city of Fort Worth.
"The board has given us the flexibility to pursue the lowest available interest rate," Porter said. "We will continue to evaluate opportunities to refund callable debt. You may see another transaction from the NTTA this year."
