BRADENTON, Fla. - The North Carolina Turnpike Authority received its first ratings as it plans the upcoming issuance of $636 million of debt for its first toll road project - the 18.8-mile Triangle Expressway around Raleigh.

Standard & Poor's on Friday assigned a AA rating to $341 million of bonds that will be backed by state appropriations and a BBB-minus to $295 million of senior revenue bonds.

Proceeds of the bonds, expected to sell next month, will go toward financing the new toll road. The NCTA also is seeking a $400 million federal Transportation Infrastructure Finance and Innovation Act loan, which would be subordinate to the bonds.

"We're pleased that the project is marching forward," Grady Rankin, the NCTA's chief financial officer, said about the long-planned road. "I think we're happy with the ratings. They are adequate to permit the deal to go forward.

The authority has talked to other rating agencies about the deal and will determine soon whether to seek additional ratings, Rankin said.

According to Standard & Poor's, the NCTA expects to issue the appropriation-backed bonds in two series. The Series B debt may be sold as taxable Build America Bonds.

"I think one of the interesting aspects of the appropriation transaction is that the second series will be Build America Bonds and so they receive a 35% federal subsidy, which allowed them to increase the dollar amount of the issuance," said analyst Richard Marino.

Rankin said the NCTA is permitted to issue BABs and is still evaluating the program. He declined to estimate how much in BABs the agency is considering.

A determination about whether to use BABs will be made closer to pricing, and will depend on the economic advantages and size of the offering, he said.

Marino, who reviewed the appropriation-based bonds, said the AA rating reflected continuing legislative support for the project, an absolute and irrevocable payment obligation of debt service from the appropriated funds when received in the trust indenture, strong coverage of appropriated revenue to the authority from all revenues that flow into the highway trust fund, and historical strength of the fund's revenues.

The $295 million Triangle Expressway senior revenue bonds that received a BBB-minus rating were reviewed by Standard & Poor's analyst Laura Macdonald.

"In our view, credit concerns include the risks associated with a single-asset facility, weaker-than-usual demographics to support the road, and the recession's effects on traffic," Macdonald said. "What we view as strong state support and a solid financial structure counterbalance these weaknesses."

Assured Guaranty Corp. may insure all or a portion of the bonds.

However, the NCTA is awaiting passage of a bill that would allow it to issue refunding bonds with maturities up to 40 years, a requirement sought by Assured. Currently, refunding bonds are restricted to the maturities of the original bonds. The bill has passed the Senate and may be considered by the House as early as next week.

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