After receiving rating upgrades from Standard & Poor’s, the Maine Turnpike Authority is set for its negotiated sale on Monday of $68.8 million of Series 2012A turnpike revenue bonds and $70 million of Series 2012B revenue refunding bonds.
Last week, Standard & Poor’s upgraded the MTA’s senior-lien bonds to AA-minus from A-plus and special obligation bonds outstanding to A from BBB-plus. The revenue bonds for sale on Monday received an AA-minus rating and a stable outlook.
Standard & Poor’s analysts cited the Turnpike Authority’s “continued strong financial performance and business position during a time of stagnant traffic growth” as the basis for the upgrade.
Fitch Ratings also rated the Series 2012A and Series 2012B revenue bonds AA-minus and Moody’s Investors Service has assigned an equivalent Aa3.
Maine residents will have priority to purchase the bonds during a retail-order period on Monday.
The MTA operates the 109-mile toll road from the New Hampshire border to Augusta and operates or maintains 19 toll plazas, five service areas, nine maintenance areas and a Maine State Police troop headquarters.
The proceeds of the Series 2012A bonds will go toward general turnpike projects, including park and ride lots and bridge reconstruction.
The Series 2012B bonds will refund the authority’s Series 2003 and 2004 revenue bonds. Since both series are not callable until 2013 and 2014, respectively, a portion of the Series 2012B proceeds will be held in escrow until their call dates.
Executive director Peter Mills says the MTA hopes to save around $7.6 million in present and future interest by issuing refunding bonds now.
“The market seems to be starved for munis,” Mills said.
This is the first of MTA’s bond offerings with Mills as the new executive director. Former chief Paul Violette resigned last March amid allegations of excessive spending and misappropriation of funds.
The bond sale comes just days after Maine Gov. Paul LePage signed the Act to Simplify Toll Discounts and Amend Certain Powers and Procedures of the Maine Turnpike Authority, or LD 1623.
The legislation repeals the 30-year-old mandate requiring specific commuter discounts and allows the MTA to design new discounts.
As the bill was just signed Wednesday, it was not taken into account in any credit ratings report. Joseph Pezzimenti, a Standard & Poor’s analyst, says it’s too soon to determine whether it would have any effect on the authority’s rating.
Underwriters for the offering are Bank of America Merrill Lynch, Siebert Brandford Shank & Co., JPMorgan, Morgan Stanley & Co. and Ramirez & Co.
Bond counsel is Mintz, Levin, Cohn, Ferris, Glovsky and Popeo PC.
