Standard & Poor’s lowered its rating to C from CC on Connector 2000 Association Inc. of Greenville, S.C.’s bonds and placed the rating on CreditWatch with negative implications.
“The rating actions reflect our view that a payment default on the senior-lien bonds is expected to occur on the Jan. 1, 2010, payment date, absent a debt restructuring that management does not expect to conclude before that time,” said Standard & Poor’s credit analyst Mary Ellen Wriedt.
The lowered rating reflects the continued failure of traffic and revenues to reach projected levels and the tapping of the reserve account for debt service payments since fiscal 2003.
There is continued uncertainty regarding the project’s long-term ability to pay timely principal and interest under the current back-ended amortization schedule. Current figures provided by the association indicate that the senior debt service reserve fund has been nearly exhausted in 2009 following the July 1 interest payment, and a payment default will occur as of Jan. 1, 2010.
Management has stated that they are in discussions with the bond trustee and the state of South Carolina to explore restructuring the debt; however, this restructuring is not expected to conclude before the payment default.
Opened in March 2001, the Southern Connector is a 16-mile, four-lane start-up toll road extending from the intersection of Interstate -85/185 to the intersection of Interstate-385 in Greenville.
The toll road provides the major east-west traffic flow in the southern part of Greenville. The association is a nonprofit corporation that was formed in 1996 to construct and operate the Southern Connector.
The Connector 2000 Association has outstanding $64.4 million of Series 1998 A senior current interest toll road revenue bonds and $165.4 million of Series 1998 B senior capital appreciation toll road revenue bonds.
