DALLAS — The North Tarrant Express, a $2 billion toll road project that represents one of the largest public-private partnerships in Texas, begins its financial history clinging to investment-grade ­ratings.

But with congestion in the Dallas-Fort Worth area all but certain to increase, revenue projections indicate growing revenues for the managed lanes of the expressway that will connect Fort Worth to the Dallas-Fort Worth International Airport, analysts for Fitch Ratings said yesterday.

“Given that the project is not expected to open until 2015, it is Fitch’s view that congestion on the corridor will likely be the same or worse than conditions today,” analyst Mike McDermott said.

McDermott and lead analyst Chad Lewis explained their rationale for their BBB-minus rating on the NTE project in a conference call yesterday.

At the lowest investment-grade rating, one downgrade would represent a significant slip for the project, financed in part through $400 million of tax-exempt private activity bonds to be issued through the conduit Texas Private Activity Bond Surface Transportation Corp. The PABs are derived under a $15 billion authorization by Congress in 2005.

Moody’s Investors Service rates the PABs at Baa2. Standard & Poor’s does not rate the debt.

“The PAB is assumed to have an interest rate of 7.75%,” Fitch analysts wrote in their report. “Fitch views PABs as an important feature of the capital structure, since it eliminates refinance exposure.  Senior lien debt is expected to be interest only until 2030 when principal payments commence.”

Given the novelty of the P3 deal, Fitch analysts noted the limited history of such projects.

“Managed lane projects have a limited amount of meaningful history and there exists a significant uncertainty associated with price sensitivity given the highly demand-driven nature of toll rates,” the analysts noted. “The presence of free alternative competing general purpose lanes directly next to the managed lanes, along with uncertainty relating to the current economic recession, could materially affect congestion on the general purpose lanes.”

The theory behind managed-lane projects is that drivers facing rush hour congestion on free lanes will shift into the tolled lanes, despite the relatively high cost. The NTE will have four entry points in each direction. Fitch estimates that 25% of traffic in the free lanes will move into the tolled lanes when the free lanes reach 70% of capacity.

The NTE will be built by a consortium known as North Tarrant Express Mobility Partners beginning early next year. NTE Mobility Partners will hold a 52-year concession from the Texas Department of Transportation to design, build, finance, operate, and maintain the first two segments of the North Tarrant Express. 

Spanish toll developer Cintra ­Concessiones Infraestructuras de Transporte holds a 57% ownership stake in the partnership, with 33% indirectly owned by Meridiam Infrastructure ­Finance, and 10% owned by Dallas ­Police and Fire Pension System.

Cintra’s parent Grupo Ferrovial created a Texas-based subsidiary in partnership with W.W. Webber to oversee engineering and contracting on the project. The contract is 100% guaranteed by Ferrovial’s subsidiary Ferrovial Agroman S.A.

About $1.1 billion of funding for the project is expected to come from debt. The PABs will have 30-year maturities and a $650 million TIFIA loan will have a 35-year maturity. TxDOT is expected to provide  $570 million. Equity invested is estimated to be about 27% of the capital structure.

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