ATLANTA - The Kentucky Turnpike Authority today will begin selling $200 million of revenue bonds that were authorized for several road projects designed to facilitate economic development in the state.
Goldman, Sachs & Co. is book-runner and Peck, Shaffer & Williams LLP is bond counsel.
There is a retail order period today, and the remaining bonds will be available for purchase by institutional investors tomorrow. The bonds, which will be issued as Series 2008A economic development road revenue bonds, have maturities from 2013 to 2028, said Tom Howard, the executive director of the state's Office of Financial Management.
"Principal is being amortized from 2013 to 2028 to smooth out the overall debt profile of the authority," he said.
Howard noted that the KTA is one of the state's premier credits.
The agency "historically has received tremendous response in the marketplace," he said. "We hope that this transaction will continue that tradition."
In addition to the proceeds being used for road projects, a portion will also be used to refund a portion of the outstanding Kentucky Asset/Liability Commission project notes, which are called Series 2007A road fund first.
The Series 2008A bonds are the result of legislation passed by the 2006 General Assembly. However, a lawsuit was filed over what projects could be funded with the bonds, but state officials have said it will have no impact on the deal.
During the 2008 session, lawmakers passed a bill detailing more projects to be funded with the Series A bonds, but Gov. Steven Beshearvetoed it. That bill would have restored several projects that would not have received funding from this 2008 bond deal.
Beshear vetoed the bill over concerns that it could tie his hands when it came to administering the road funds. State Sen. David Williams sued Beshear on grounds that the veto came too late, as the governor did not act on the bill until after the end of the session. The case, Williams v. Grayson, was filed in the Franklin Circuit Court in May.
In a statement about the lawsuit, the governor said the veto was necessary in order to preserve the needed flexibility to appropriately fund critical and unforeseen transportation projects.
Howard stressed that the lawsuit would not adversely affect the authority. The preliminary official statement for the bonds lists the suit in the litigation section, saying it "will not affect or challenge the authority of the executive branch to provide funding for the projects that were begun under the 2006-2008 biennial highway construction plan and that are the subject of a portion of the funding from the proceeds of the 2008 bonds."
"The lawsuit does not challenge previously authorized road projects by the 2006 General Assembly, so this is not an issue with the marketing of these bonds," Howard said.
The bonds are rated AA-minus by Fitch Ratings, Aa3 with a negative outlook by Moody's Investors Service, and AA-plus with a stable outlook by Standard & Poor's.
Moody's analyst Maria Coritsidis noted in a report that the KTA's rating reflects a record of financial control, including close monitoring of revenues together with a history of proactive responses to lowered revenue estimates.
"This strength is offset by low per-capita income levels, above-average state debt levels, and low retirement system funded levels," the report states. "In addition, despite increased diversification, Kentucky's economy remains dependent on a weakened manufacturing sector."