The New Jersey Turnpike Authority yesterday approved refunding up to $900 million of outstanding debt to generate savings for the agency.
Dennis Enright, a principal at NW Financial, the authority's financial adviser, said the NJTA will evaluate which outstanding bonds to refinance and is looking at "a whole bunch of series" for refunding potential. The actual amount of debt the authority chooses to refund depends upon market conditions. It has the ability to refund up to $900 million.
"We're just going to look at the deals and look at the market, and monitor it and try to maximize it," Enright said.
The authority will offer the refundings through different transactions as opposed to one large refinancing. Enright anticipates the sales will price by the end of the year. The soonest the agency would head to market would be in 30 to 45 days.
The NJTA, which has an underwriting pool of 32 investment banks, has yet to select an underwriter for a refunding deal. The authority has about $6.5 billion of outstanding debt, including $1.37 billion of taxable Build America Bonds that Morgan Stanley priced on April 20.
Moody's Investor Service and Standard & Poor's rate the authority A3 and A-plus, respectively. Fitch Ratings assigns its A rating to the credit.
The NJTA is in the midst of a $3 billion road-widening project on the New Jersey Turnpike, which covers 148 miles, and shoulder expansions on the 173-mile Garden State Parkway. The agency's 10-year, $7 billion capital plan also includes $1.7 billion of bridge upgrades, and toll plaza improvements, among other projects.
In addition, it has agreed to contribute up to $1.25 billion towards a new commuter-rail tunnel that will run through the Hudson River, connecting Newark to mid-town Manhattan. New Jersey Transit is overseeing the $8.7 billion tunnel development, called the Access to the Region's Core, or ARC project. The authority will make yearly payments to NJTransit beginning in 2012 and ending in 2018. The NJTA last increased tolls on the Turnpike and the parkway in December. Tolls are scheduled to increase again in 2012.
While traffic on the Turnpike and the parkway has decreased by 5% and 3.5% from January through July 31, revenue has increased by 26.5% on the Turnpike and 37.5% on the parkway.
Passenger cars on the turnpike currently pay 7.4 cents per mile for a full-length, peak period trip. That cost will increase to 11.4 cents after the 2012 toll increase, according to the official statement for NJTA's $1.75 billion revenue bond deal that priced in April. Passenger vehicles on the parkway currently pay 3.2 cents per mile for a full-length, round-trip on the roadway. Following the 2012 toll hike, that cost will increase to 4.8 cents per mile, according to the OS.