DALLAS - North Texas Tollway Authority's $463 million of refunding bonds were oversubscribed 10 times on their Nov. 5 pricing, bringing interest rate savings of $50 million or nearly 11%, according to NTTA chief financial officer Horatio Porter.
"We saw real strong, real positive interest," Porter said. "That tells me there's a real strong interest in what we've got going on in Texas."
NTTA scaled back the offering from $499.5 million after the market moved against the deal by about 20 basis points over the last week, Porter said. Nonetheless, NTTA has never seen a refunding draw this degree of investor interest, he said.
Mitchell Gold, managing director for Bank of America Merrill Lynch, was lead banker on the deal with First Southwest Co. managing director Ron Davis as financial advisor.
The refunded bonds were issued in the momentous year of 2008, when NTTA was trying to raise $3.2 billion to build the Sam Rayburn Tollway (State Highway 121) as the financial markets were collapsing.
"We knew that those were some pretty rare and extraordinary times, but we had to get those projects built," Porter said. "This is one of the first opportunities we had to refund some of those higher coupons."
With about $7.62 billion of debt outstanding, NTTA has no plans to issue bonds for new money, Porter said.
The 2014 refunding bonds were issued in two series on first and second-lien tiers.
Moody's rates the first-tier bonds A2 and the second-tier A3. Standard & Poor's rates the first-tier A-minus and the second-tier BBB-plus. Outlooks are stable.
"The A-minus rating on the authority's first-tier bonds reflects our view of the highly leveraged system of toll facilities that increasingly relies on higher traffic and revenue growth levels to support adequate senior- and subordinate-lien projected debt service coverage under moderate downside stress scenarios," S&P analyst Todd Spence wrote. "The BBB-plus rating reflects our view of the second-tier bonds' subordinate status."
