DALLAS – In the largest deal in its history, the North Texas Tollway Authority achieved record net present value savings of 15%, or $380 million, on the sale of $2.5 billion of refunding bonds, officials said.

In two days of retail and institutional pricing on Wednesday and Thursday, the deal attracted $19 billion of orders, said Horatio Porter, NTTA's chief financial officer.

“It was staggering the number of orders we received,” said NTTA chief financial officer Horatio Porter.
“Refunding all of our Special Project System debt with NTTA System bonds allows us to combine two well performing assets in one system," said Horatio Porter, chief financial officer for the North Texas Tollway Authority.

“It was staggering the number of orders we received,” Porter said. “We were 7.5 times oversubscribed. We had a good sense from the retail order period that there was going to be strong demand.”

Porter had anticipated 11% savings or about $290 million before the deal went to market.

“Every maturity was oversubscribed,” Porter said. “We thought there would be softness in the belly of the yield curve, but it was strong across the board. As a result we were able to reduce yields from 2 to 18 basis points.”

Porter said pre-sale marketing efforts helped guarantee strong demand. In addition to an on-line roadshow, the financial team made presentations in Boston, New York and New Jersey, he said.

Mitchell Gold, managing director at book runner Bank of America Merrill Lynch, and BAML director Allegra Ivey were lead bankers on the deal. JP Morgan executive director Douglas Hartman was lead banker for the co-senior manager.

Michael Newman, senior vice president at First Southwest Co./Hilltop Securities, is NTTA’s financial advisor.

McCall Parkhurst & Horton and Mahomes Bolden are co-bond counsel.

The bonds came in two series. The $1.79 billion Series A are first-tier, with ratings of A1 from Moody’s Investors Service and A from S&P Global Ratings. The $776.6 million of second-tier Series B carry ratings a notch lower from both agencies.

The purpose of the deal was as significant to NTTA as the size.

The refunding allows NTTA to merge its Special Project System created in 2011 with its main system bonds. After the global financial crisis in 2008, the SPS indenture backed by a separate revenue stream was designed to preserve NTTA’s credit ratings on existing bonds as it took up a state mandate to begin financing new projects in Fort Worth and suburbs to the west of Dallas.

To finance the SPS projects, NTTA was granted a new form of insurance from the Texas Department of Transportation called a “toll equity loan agreement,” or TELA, that earned double-A ratings for the bonds. The TELA, set to expire in 2022, will close five years early with the new bonds.

“Refunding all of our Special Project System debt with NTTA System bonds allows us to combine two well performing assets in one system, achieve significant debt-service savings, and seal our contract obligations to the Texas Department of Transportation,” Porter said.

Porter will present the results of the sale to the board on Wednesday and said he has already received positive responses from the board via email.

“We know we have a great credit, so we were excited about the offer,” Porter said. “To see such an overwhelming response was quite validating about the great things going on at NTTA.”

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