The Pennsylvania Turnpike Commission is gearing up to sell about $600 million of revenue debt on Wednesday, including taxable Build America Bonds, to help finance infrastructure needs on the state’s 535-mile toll road.

Bank of America Merrill Lynch will price the Series 2010B bonds. Cozen O’Connor and the Law Offices of Denise Joy Smyler are co-bond counsel. Phoenix Capital Partners LLP and NW Financial Group LLC are co-financial advisers.

The PTC will issue the entire $600 million as BABs or sell fewer BABs and incorporate tax-exempt bonds in the transaction, depending upon market conditions, according to Nick Grieshaber, the commission’s chief financial officer.

“At this point, I think it’s going to be mostly BABs … depending on the market at the time of pricing,” he said. “It could be that there might be some tax-exempts, but I think the intent right now is that it would be all taxable BABs.”

Using BABs, issuers receive a 35% subsidy on interest costs from the federal government.

Fitch Ratings assigns its A-plus rating to the Series 2010B senior-lien bonds. Moody’s Investors Service rates the Series 2010B bonds Aa3. Standard & Poor’s rates PTC’s senior-lien credit A-plus. The Turnpike has $2.26 billion of senior-lien bonds outstanding.

The Turnpike also plans to offer the BABs with longer maturities than in its previous sales. Last year, the commission sold BABs that mature in 2037 and 2039, according to official statements. The Series 2010B bonds may go out to 2050, as the PTC has the ability to issue 40-year bonds.

“The type of projects we’re financing have a very long age — they’re long-life projects and there’s investor demand particularly at the long end of the curve there,” Grieshaber said. “So that’s some of the reasons why we’re looking to do a longer issue.”

The proceeds will help finance infrastructure upgrades within the Turnpike’s 10-year capital plan, including road construction and widening, replacing and re-decking of bridges, and interchange improvements, according to the preliminary official statement.

PTC revenue, which is mostly from tolls, secures the Series 2010B bonds. Officials anticipate implementing yearly toll increases as the commission now make yearly payments to the state’s Department of Transportation to help finance its infrastructure needs. That payment agreement was crafted under Act 44, which lawmakers approved in 2007 to generate more revenue for transportation.

The Turnpike’s board last month approved a toll increase that will take affect in January 2011. Cash tolls will increase by 10% at that time while EZPass tolls will increase by 3%.

The PTC generated $691.4 million of net toll revenue, after discounts, in fiscal 2010, according to unaudited figures. Fiscal 2010 ended May 31. The Turnpike expects to collect $708.8 million of net toll revenue this fiscal year.

A traffic and revenue study dated March 30 and compiled by Wilbur Smith Associates projects the PTC will collect $734.4 million of gross toll revenue in fiscal 2011, serving nearly 188,000 of vehicles. Those numbers are expected to increase to $2.63 billion of toll revenue by fiscal 2035, based on annual toll hikes of 3%. The report estimates the toll road will serve more than 325,000 vehicles in fiscal 2035.

Pennsylvania faces a $472.5 million transportation funding shortfall this year as the Federal Highway Administration in April rejected that state’s request to implement tolls on Interstate 80. Officials anticipated such toll revenue and proceeds from bonds they could support in its fiscal 2011 budget.

Gov. Edward Rendell last month called for a special session of the legislature to begin Aug. 23 so lawmakers can address the transportation funding deficit. The legislature has yet to announce a special session schedule.

Pennsylvania’s Transportation Commission Thursday approved cuts in the state’s 12-year transportation program. Officials slashed funding for roads, bridges, transit, aviation, and freight rail by $16.3 billion to $51.6 billion, a 24% cut, over the next 12 years.

The commission consists of 10 appointees, along with the majority and minority chairpersons of the legislature’s transportation committees. It meets every two years to review the 12-year transportation program.

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