A redeveloped Union Station serves as the hub for RTD's bus and rail lines.

DALLAS — Colorado's Regional Transportation District will use proceeds from a $200 million sale of certificates of participation to buy buses and rail cars for its rapidly growing Denver-area mass-transit system.

The negotiated deal is expected to price Aug. 5 if market conditions allow, RTD officials said.

Wells Fargo Securities is book-runner, with managing director Bob Kinney as lead banker. Mike Newman, senior vice president at First Southwest Co. is RTD's financial advisor.

Wells Fargo will underwrite 50% of the COPs, followed by co-managers Stifel Nicolaus at 22%, Bank of America Merrill Lynch & Co. at 10%, U.S. Bancorp at 10%, and Harvestons Securities at 8%.

The August deal is the only issue expected from RTD this year, spokesman Scott Read said.

"This is a reduction from past issuance levels as RTD has completed financing for a number of its FasTracks corridors, a portion of its fleet replacement and refundings in recent years," Read said.

The COPs are rated Aa3 by Moody's Investors Service, and A by both Standard & Poor's and Fitch Ratings.

Outlooks are all stable after Fitch removed its negative outlook.

The restored outlook "reflects Fitch's expectation that RTD will continue to adhere to their 1.2x net revenue coverage policy for all debt obligations," analyst Jose Acosta wrote. "Demonstrated commitment to this policy, which Fitch considers an important credit feature, has served to limit RTD's exposure to revenue volatility and budgetary contingencies."

Fitch downgraded RTD's COPs to A from A-plus in March 2014; the former negative outlook had reflected "exposure to projected thinning financial margins amidst RTD's aggressive expansion plan."

RTD expects to use a five-year par call provision on the six to 10-year maturities to provide additional flexibility in its debt structure, said Read. The balance of the issue will have a traditional 10-year par call.

"We believe that a wide variety of investors will be interested in purchasing our transaction as we have seen tremendous growth in the Denver metropolitan service area over the past several years," Reed said. "That has translated into steadily increased ridership throughout our system and strong annual growth in sales tax receipts, both of which have benefitted the district's financial position."

With this deal, RTD will have about $1.3 billion in similarly secured obligations outstanding, according to Moody's. The district also has approximately $1.9 billion in sales tax bonds and parity obligations outstanding under two separate liens.

The senior-lien bonds, known as the "0.6% bonds," account for about $167 million. The "0.4% bonds" used to build the FasTracks system total about $1.4 billion.

RTD also has a $280 million loan under the Transportation Infrastructure Finance and Innovation (TIFIA) Program that is on par with the 0.4% bonds.

The senior-lien sales-tax bonds are rated Aa2 by Moody's, and AA-plus by Fitch. Standard & Poor's provides an issuer credit rating of A on RTD.

"The ratings reflect our view of such factors as RTD's very low industry risk, extremely strong economic fundamentals, and extremely strong and improved market position," said Standard & Poor's credit analyst Paul Dyson.

Voters in Denver and surrounding counties approved the FasTracks major expansion of rail service 2004.

With that approval came a 0.4% sales tax increase designed to finance $4.7 billion of projects. Those costs have increased to $5.7 billion, and projects promised for 2017 are now on hold, possibly for decades.

RTD has only $1.1 million of remaining FasTracks prior-lien sales tax debt authorization, but public-private concession agreements allow other parties to issue subordinate sales tax-secured debt outside the voter authorization, with a lien on sales tax ahead of the COPs.

In November 2014, RTD and Regional Rail Partners signed a contract to begin construction on the North Metro Rail Line, one of four electrified commuter rail lines RTD is building.

Regional Rail Partners is the prime contractor for the line, which will serve north Denver, Commerce City, Thornton, Northglenn and Adams County.

On July 14, RTD staff recommended board approval of a proposal from Balfour Beatty Infrastructure Inc. to design and build the $233 million Southeast Rail Extension.

The proposal calls for completing construction of the line by early 2019 using a combination of federal, private and local funds.

Half of the project will be funded by the Federal Transit Administration's New Starts Program, which supplies major capital grants to metropolitan areas. The project has already been accepted into FTA's New Start's engineering phase and is included in President Obama's FY 2016 budget. About 14% of the funding would come from private businesses and local governments, and 36% would come from RTD through local funding sources.

"This extension will make it possible for RTD to connect people in a rapidly growing part of the metro area to the rest of the region, including Denver International Airport," said Dave Genova, RTD's interim general manager.

Genova was named interim GM on April 9 after general manager Phillip A. Washington accepted the top job at the Los Angeles County Metropolitan Transportation Authority. The RTD board is continuing its search for a permanent replacement.

"Our focus is on maintaining the continuity, stability and health of RTD, as we continue to complete four new rail lines and the US 36 Bus Rapid Transit in 2016," said RTD Board chairman Chuck Sisk in a prepared statement at the time. "Dave will provide us with that leadership, as well as the ongoing management of our base business operations."

Genova has been with RTD for more than 21 years, serving as the assistant general manager of safety, security and facilities for eight years.

During his tenure, RTD has launched the FasTracks System and redeveloped the landmark Union Station rail terminal into the hub of its bus and rail lines.

RTD anticipates funding FasTracks 56% by bonds and loans, 36% by federal grants, 9% by public/private partnerships, and the remainder by pay-as-you-go capital and other sources.

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