BRADENTON, Fla. — Florida's Tampa-Hillsborough County Expressway Authority will make its first venture into the bond market as a standalone credit next week.

The THCEA will offer $454.8 million of new and refunding bonds, which will price Wednesday with Bank of America Merrill Lynch as the book-runner.

Though the Expressway Authority's name is known in the bond market, in the past it has operated as an agency of the state with Florida's Division of Bond Finance selling bonds on its behalf. In 2009, the Florida Legislature authorized the Expressway Authority to issue its own bonds.

Proceeds will refinance all outstanding Series 2002 and 2005 bonds that were issued by the state on behalf of the Expressway Authority, repay a $49.2 million loan made by the Florida Department of Transportation from the State Infrastructure Bank, and repay a $7.4 million loan from the state Toll Facilities Revolving Trust Fund.

A portion of the offering also will provide new money to finance some capital projects, including a portion of a one-mile project called the Interstate 4 Connector, which will provide a tolled link between I-4 and the THCEA's single-tolled asset, the Selmon Expressway.

Though the $400-million I-4 Connector is being built and largely financed by FDOT, the Expressway Authority will receive a portion of its toll revenues.

Next week's offering is structured in four series, including a $194.6 million tax-exempt refunding bond series, a $146.94 million tax-exempt refunding bonds series, a $43 million taxable revenue bond series, and $70.2 million of taxable refunding bonds.

The bonds are rated A3 by Moody's Investors Service and A-minus by Standard & Poor's.

Both agencies assign positive outlooks to the Expressway Authority's debt partly because they expect actual traffic to meet forecasts.

Because it is the authority's first bond issue as a standalone credit, the agency is also terminating its lease-purchase agreement with FDOT and issuing under a new master bond resolution, according to its chief financial officer, Lynne Paul.

"We're very happy with the ratings because of the fact that we don't have the backstop of FDOT anymore, so we are basically out on our own," Paul said. "We're now at 130% coverage on net tolls, instead of gross tolls, and that makes us stronger."

Because the THCEA will no longer have FDOT pay operations and maintenance on the Selmon Expressway, the deal is also providing proceeds for reserves and renewal and replacement funds, she said.

Under the FDOT agreement being terminated, the authority's toll road would have reverted to the state after the bonds were paid off.

"I think one of the most exciting things for us is [terminating] the lease-purchase agreement so we don't have to give our road back to FDOT," Paul said. "It's our asset. Now we get to keep our money, determine what projects we need, and we get to decide how the funds are going to be expended."

The 15-mile-long, limited-access Lee Roy Selmon Expressway, named after the Tampa Bay Buccaneers pro football hall-of-famer, is the THCEA's main asset. The Selmon has provided a tolled east-west link between Tampa and Brandon since the mid-1970s.

In 2006, the Expressway Authority built elevated, reversible lanes with open-road tolling in the center of the Selmon, providing one-way traffic for faster commutes in the morning and afternoon.

The 2012 bonds are secured by a revenue pledge and first lien on the net toll revenues of expressway system.

The flow of funds is closed in the bond resolution, according to Moody's analyst Maria Matesanz.

The toll-rate covenant requires net revenues in each fiscal year to be sufficient to pay 130% of the annual debt-service requirement for the senior bonds, or 100% of operations, maintenance, and administration costs as well as other funds, whichever is greater.

Though the Selmon Expressway is the primary asset of the authority, "a very high percentage of toll revenue is generated by passenger vehicles, which have provided stable traffic and revenues even through the economic recession," Matesanz said.

She said one potential challenge is that state lawmakers have put forward proposals to merge the Tampa authority and other expressway authorities with the Florida Turnpike Enterprise as a cost-saving measure, through consolidation of operations.

However, the state has covenanted not to limit or alter the rights vested in the authority under the authorizing act, or impair the rights and remedies of bondholders, Matesanz said.

According to Paul, the THCEA and three other expressway authorities have voluntarily worked with the state-run turnpike to create a centralized customer service center. All toll collections will flow through the service center so drivers will receive one bill no matter what toll road they are on.

Completion of the service center is about 36 months away, Paul said.

"We hope this will satisfy the Legislature that we've agreed this is the best way to provide services for tolling," she said.

Standard & Poor's said that it views termination of the agreement with the state as a credit-neutral event.

"While the authority has lost its guarantee to have operating expenses met, it has historically demonstrated an ability to comfortably meet debt service requirements on a net revenue basis, and now has the ability to build cash resources rather than being required to transfer virtually all excess revenue to FDOT," said S&P analyst Adam Torres.

A shift to a net-revenue pledge, and associated bond-provision calculations, standardizes the Expressway Authority's security package according to industry practices, he said.

"We further note that such floors with respect to the [1.3 times] rate covenant and additional bonds test are higher than typical, making for a stronger overall security package," said Torres. "The bonds are further secured, as is typical, by a debt-service reserve account fund to the IRS maximum."

In addition to the 2012 bonds, the authority will repay FDOT $216 million in costs accumulated under the former lease-purchase agreement.

"We view the terms of the debt repayment, with respect to the authority, favorably, in that this debt is subordinate to the bonds and is to be repaid in equal annual installments beginning July 1, 2025," Torres said.

A recent toll policy, which goes into effect when the 2012 bonds are issued, requires rates to be raised at least 2.5% annually or based on the consumer price index, whichever is greater.

S&P said the toll policy "contributes additional strength" in the authority's revenue predictability.

In addition to B of A Merrill, other underwriters pricing the bonds Wednesday are Raymond James | Morgan Keegan, Citi, Loop Capital Markets, and Morgan Stanley.

First Southwest Co. is the authority's financial advisor.

Broad and Cassel and Styles, Taylor & Grace PA are co-bond counsel. Nabors, Giblin and Nickerson PA is disclosure counsel. Underwriters' counsel is Byrant Miller Olive PA.

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