DALLAS -The North Texas Tollway Authority last week closed on $3 billion of revenue bonds issued in March, including an agreement with MBIA Insurance Corp. to insure $373 million of fixed-rate debt shortly before the insurer was downgraded by Fitch Ratings.

Fitch on Friday dropped the insurer rating for MBIA to AA from AAA and the long-term rating of MBIA Inc., the parent holding company of MBIA Insurance, to A from AA, while maintaining a negative outlook.

The NTTA closed on its deal with MBIA on Thursday, one day before the Fitch downgrade.

Moody's Investors Service and Standard & Poor's still rate MBIA triple-A, though Moody's maintains a negative outlook on MBIA.

The NTTA issued $2.4 billion of bonds on March 6 and another $600 million on March 26.

MBIA will insure $373 million of fixed-rate Series 2008A bonds maturing in 2028. Another $150 million tranche of Series D bonds issued on March 6 was insured by Assured Guaranty Corp., which has retained its triple-A ratings.

The new issues refund bond anticipation notes sold for the State Highway 121 toll project north of Dallas.

"MBIA was very pleased that its insured bonds were more than three-times oversubscribed with strong pricing to yield 5.33% or 34 basis points inside shorter-dated uninsured bonds," the insurer said in a prepared statement. "Even with the insurance premium, the NTTA recognized significant savings on the MBIA-insured bonds."

The statement did not disclose the cost of the insurance.

"At a time when the municipal bond market continues to experience unprecedented dislocation, the NTTA transaction signals strong investor confidence in both the NTTA and MBIA," the insurance company said in its statement. "This increased confidence will play a positive role in returning more issuers to the capital markets to access cost-effective funding with an MBIA guarantee on their bonds."

For the NTTA, continued strong demand for its bonds is critical as the authority launches an unprecedented level of highway construction in the Dallas-Fort Worth area. With the SH 121 issue, the authority has more than tripled its debt load and is meeting today on plans to build another toll project, State Highway 161, which would connect to SH 121 and indirectly to the President George Bush Turnpike.

While the NTTA achieved its goal of maintaining an "A-category" underlying rating from Moody's and Standard & Poor's, Fitch downgraded the authority's previously issued debt to BBB-plus from A-minus before withdrawing the rating in February per the NTTA's request. Standard & Poor's lowered its rating one notch to A-minus, while Moody's maintained its A2.

"These ratings are consistent with our expectations and indicative of the NTTA system's financial strength and stability," NTTA board chairman Paul N. Wageman said of the two A-category ratings last week. "We have a sound financial plan to permanently finance SH 121, a truly superior project."

Total financing for the SH 121 project is expected to be about $4.9 billion.

The NTTA pointed out that Fitch also does not assign an insured rating for the most recent bond issues, only Moody's and Standard & Poor's do.

The bulk of the debt is for the NTTA' $3.2 billion payment to the Regional Transportation Council for the right to build the highway.


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