BRADENTON, Fla. — Kentucky closes on $728 million in bonds and notes Friday, bringing the average cost of all financings for its portion of the Ohio River Bridges Project to 4.4%.
A state official said the low financing cost would help decrease the amount of tolls securing the debt, which is funding the $1.3 billion "Downtown Crossing" portion of the project linking the Louisville area and southern Indiana.
The Kentucky Public Transportation Infrastructure Authority received nearly $3 billion in orders for the Citi-led negotiated sale of bonds and notes, which priced Dec. 12 on one of the heaviest new-issue weeks of the year.
"The speed with which our bonds sold shows investors are confident in the soundness of the project, and the low interest rates we have been able to secure will keep toll rates low," said Mike Hancock, Secretary of the Kentucky Transportation Cabinet and chairman of KPTIA. "That's a win for ultimate users of the Downtown Crossing."
Work on the state's largest transportation project began June 18 with renovating the existing Kennedy Bridge carrying Interstate 65 through downtown Louisville.
The project also includes adding a new, adjacent I-65 bridge, and reconstructing interchanges in Louisville and Jeffersonville, Ind.
Eight miles upriver is Indiana's $1.3 billion half of the project called the "East End Crossing" where a new bridge and approaches will complete an outer loop around the greater Louisville area from Prospect, Ky. to Utica, Ind.
The overall project is being constructed by the two states to improve cross-river mobility, especially on heavily traveled I-65. It will also relieve congestion for local drivers. All bridges will be tolled.
While Indiana is using a public-private partnership to build its project, Kentucky is using traditional toll-bond financing.
Last week, the Bluegrass state issued three series of revenue bonds for a total of $275.6 million, and two series of bond anticipation notes totaling $452.2 million, rated BBB-minus by Fitch Ratings and Baa3 ratings by Moody's Investors Service.
The bonds were sold in three series as $174.8 million of current interest bonds, $27.5 million of capital appreciation bonds, and $73.3 million of convertible capital appreciation bonds.
The current interest bonds priced with two maturities - one consisting of $76.8 million to yield 5.95% with a 5.75% coupon in 2049 and another composed of $97.9 million yielding 6.125% with a 6% coupon in 2053.
The notes were sold with three maturities in 2017.
Some $4.7 million of tax exempt notes priced to yield 2.125% with a 3% coupon, $421.4 million of tax exempt notes yielded 2.125% with a 5% coupon, and $26.15 million of taxable notes yielded $3.22%.
The notes will be taken out in 2017 and replaced with long-term financing backed by the state's draw on a 35-year, $452 million loan through the Federal Highway Administration's Transportation Infrastructure Finance and Innovation Act.
The KPTIA closed Thursday on the TIFIA loan, which secured an interest rate of 3.88%.
According to the Federal Highway Administration, the Kentucky loan is among $13.1 billion in 38 loans handed out so far in the TIFIA program, which is authorized to make up to $17 billion in credit assistance available.