CHICAGO — The Ohio Turnpike and Infrastructure Commission tapped Citi as the senior manager for a $1.5 billion bond sale featuring a new Ohio Turnpike pledge that is key to the state's transportation plan.
The commission held a special meeting Monday morning to select underwriters and bond counsel.
Citi will be senior manager, with JPMorgan Chase & Co. and Morgan Stanley acting as co-senior managers. Co-managers are: Bank of America Merrill Lynch; Fidelity Capital Markets; Huntington Investment Co.; Jefferies & Co.; KeyBanc Capital Markets Inc.; Loop Capital Markets Inc.; PNC Capital Markets LLC; RBC Capital Markets; Rice Financial Products LLC; Stifel, Nicolaus & Company Inc.; and Wells Fargo Securities LLC.
The commission tapped Squire, Sanders as bond counsel.
It's not clear whether there will be a financial advisor on the transaction. The Huntington Bank has been acting as the commission's financial advisor, a spokesman said.
The commission is expected to enter the market with the first of two sales in the summer. The first issue will tentatively be around $1.1 billion. The commission would issue the remaining roughly $400 million within the next few years.
The bond deal is central to Ohio's new two-year $7.6 billion transportation budget. Gov. John Kasich had considered privatizing the double-A rated turnpike, which is one of the highest-rated toll roads in the U.S. But he later proposed that the commission craft a new credit pledge that will allow it to borrow up to $1.5 billion of new debt, using some of the proceeds as funds to leverage another $1.5 billion of federal dollars for transportation projects across the state.
The new credit will feature a junior lien trust agreement that will allow the commission to issue bonds against future toll revenue projections. Currently it is restricted to issuing bonds with coverage levels tied to historic revenues.
The bonds will be subordinate to the commission's existing $556 million of debt.
Fitch Ratings rates the turnpike AA and Moody's Investors Service rates it Aa3.