The Oklahoma Turnpike Authority is gearing up bond financing for a $5 billion, multi-year improvement and expansion program with plans to pick a team of underwriters and others ahead of the first debt issuance expected in early 2023, according to a turnpike official.
Wendy Smith, the authority’s finance and revenue director, said on Wednesday an initial $800 million to $1 billion of 30-year second senior revenue bonds backed by toll revenues would be priced in the municipal market in January.
“What we do after that will really depend on where we are and what our needs are and how much we spent of the previous money and that kind of thing,” Smith said, adding that subsequent bond issues would probably be sold every other year.
ACCESS (Advancing and Connecting Communities and Economies Safely Statewide) Oklahoma, which was officially unveiled last week by Gov. Kevin Stitt, addresses the state’s ongoing highway infrastructure needs over the next 15 years.
“The future of our economy will depend on having a modern highway system that manages congestion and reliable travel times,” Stitt said in a statement. “ACCESS Oklahoma is a bold investment in our future that provides needed corridor connections and expansions while making travel easier and leading to more economic development across the state.”
Currently, the turnpike authority is pursuing bids for a $200 million line of credit from banks to help jumpstart financing for the program with bids due March 11, according to Smith. She added that the short-term borrowing would be retired with proceeds from the first bond sale.
In mid-summer, the turnpike will initiate a request for proposals process for financial advisor, bond counsel, and underwriters for the initial bonds before seeking approval probably in the fall from the Oklahoma Council of Bond Oversight for the debt issuance, Smith said.
The new bonds would greatly increase the turnpike’s current $1.7 billion debt load. After the authority announced In a December the creation of a long-range ongoing plan, Moody’s Investors Service, which rates the turnpike Aa3 with a stable outlook, called the increase in debt a credit negative.
“The credit impact of the new (capital investment plan) depends on the financial metrics that (the turnpike) proposes to target as it balances the pace of toll rate increases and new debt issued to ensure (debt service coverage ratios) remain in line with historical performance, total adjusted debt to revenue remains manageable and liquidity remains strong,” the rating agency said in a Dec. 14 report.
Smith said Moody’s, as well as Fitch Ratings and S&P Global Ratings, which each rate the turnpike AA-minus, have been kept informed about the program.
“We are practical and it’s possible that we will be downgraded to A-plus. We understand that’s a possibility because this is a lot of bonds to leverage,” she said.
