BRADENTON, Fla. - In a difficult market for issuers with top ratings, let alone a new credit with a large amount of debt to sell, the North Carolina Turnpike Authority hopes to get into the bond market early in December for its first-ever issuance - a $650 million deal to finance its first project.

The revenue bonds will finance the major portion of an 18.8-mile toll road called the Triangle Expressway that will create a loop, or outer extension, around Raleigh. The expressway has three segments - the Triangle Parkway, Northern Wake Expressway, and Western Wake Expressway.

It would be the state's first toll road in a century. Because it is near the famed Research Triangle Park, which includes three well-known universities and high-tech companies, the road is expected to provide congestion relief for local roads in an eight-county region.

While the authority had hoped to sell the bonds in October, borrowing costs shot up and continue to delay the financing.

Now the NCTA is waiting for better rates and is targeting a true interest cost in the range of 6.5%, said David Miller, a managing director at Public Financial Management Inc., the turnpike's financial adviser.

The 40-year transaction is expected to be structured with a mixture of capital- and current-interest bonds.

"We believe we will have some insurance, but maybe not the entire bond issue," Miller said. "With credit spreads the way they are right now, we're hoping not to get premiums so high that they take all the value away. We have talked to a number of bond insurers."

In addition to the bond financing, funding for the Triangle Expressway would include a roughly $400 million loan under the federal Transportation Infrastructure Finance and Innovation Act, $25 million annually in pledged revenue from the state, and an operation and maintenance guarantee from the North Carolina Department of Transportation.

Traffic revenue forecasts were finalized in late summer and factored in changing traffic patterns due to higher gas costs and the current economic slowdown, said Miller, who noted that the deal was structured to be investment grade.

The authority has received positive initial feedback from credit agencies, and expects to receive ratings in the triple-B category, Miller said. Ratings will be finalized after the TIFIA loan documents are completed in about a week.

"We are virtually ready to go" with the financing and construction, said NCTA executive director David Joyner. "I sort of equate the market situation to an economic storm. As soon as the clouds clear we're ready to set sale. Right now we're just tied up in port."

There are some time constraints if the financing cannot be completed in December because the authority has signed construction contracts.

"Fortunately, it looks like prices have stabilized on construction costs and we have an extension until Jan. 20 from our contractors," Joyner said. But officials hope to price the bonds early in the first quarter at the latest, he said.

"We are carefully monitoring the market at this point [for] indications that triple-B debt is moving at a reasonable rate," Joyner said.

Miller believes there will be buyers for the deal as the market continues to settle down.

"If the market is available, we could go as early as December," he said. Miller added that the second and third week would be the optimal window for pricing the bonds, since the last two weeks of December are traditionally slow for bond sales because of the holidays.

Co-senior managers on the sale are Merrill Lynch & Co. and Banc of America Securities. Other underwriters on the deal are Citi, BB&T Capital Markets, JPMorgan, Loop Capital Markets LLC, RBC Capital Markets, Siebert Brandford Shank & Co., and Wachovia Bank NA.

Womble Carlyle Sandridge & Rice PLLC is bond counsel.

The Turnpike Authority is concurrently working on five major projects valued at nearly $4 billion, which it hopes to start within two years.

The second project for which it will use traditional bond financing is a 21.1-mile bypass connector on the east side of Charlotte estimated to cost $756.6 million. Financing for that project, which also will seek a TIFIA loan, is slated for market at the end of 2009 or early 2010.

The NCTA is also in the midst of doing its first public-private partnership to construct a new, seven-mile Mid-Currituck Bridge, which will span Currituck Sound linking the mainland to resort areas on the northern Outer Banks.

Bid proposals for the concession were received this week and the authority hopes to select a concessionaire early next month. The bridge is estimated to cost as much as $720 million, but contract negotiations will determine if the turnpike participates in the financing, Joyner said.

"We hope to enter into that agreement early next year," Joyner said. "We'll determine as we go through the concession process exactly what the final terms and conditions are and whether any contribution is expected from the state. We hope there will not be any."

The authority was expected to receive proposals from Mid-Currituck PDA Proposers with Bechtel Infrastructure Corp. as the main equity member; the Sound Connector Group, which includes Germany-based HOCHTIEF along with Bilfinger Berger Project Investments Inc.; Skanska Infrastructure Development, which includes Skanska USA Civil and RBC Capital Markets; and Currituck Development Group LLC with ACS Infrastructure Development as the lead entity and major equity member.

Information on all of the NCTA's projects can be found at www.ncturnpike.org.

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