The New York State Thruway Authority yesterday authorized the sale of up to $450 million of tax-exempt bonds on the state's second general highway and bridge trust fund credit. The deal comprises up to $250 million of new money and up to $200 million of refunding.
The refunding portion the authority sells is likely to be much less than authorized.
"Given last week's market data there may be an opportunity to do about $50 million in refunding, but if the market swings a little more in our favor we can increase that amount," authority chief financial office John Bryan said. "The authorization allows us to react quickly to take advantage of such a market swing and capture those additional savings."
The deal is scheduled to price the week of Feb. 16 and is expected to have at least one day for retail orders.
Banc of America Securities LLC is book-running senior manager on the deal and Jackson Securities is co-coordinating manager. Goldman, Sachs & Co., RBC Capital Markets, and Siebert Brandford Shank & Co. are co-senior managers.
First Southwest Co. is financial adviser and Nixon Peabody LLP is bond counsel.
The trust fund's primary sources of revenue are petroleum business taxes, motor vehicle fees, and motor fuel taxes. The state uses the proceeds to finance road and bridge capital projects.
Traffic on the Thruway was down overall in the first 11 months of 2008, but revenue was up slightly due to the impact of a toll increase, Bryan said.
The Thruway projects traffic will have dropped by 3.2% in 2008 compared 2007 but due to cost containment measures implemented after a toll increase, Bryan said he expects the year will have ended with a slight surplus of $4 million to $6 million.
The main hit has come from commercial traffic which was down as much as 10% to 15% on some days in recent months compared to same time a year ago. The Thruway Authority operates and maintains 641 miles of roadway.
Because the credit is backed by state appropriation, falling traffic doesn't have a direct impact on the credit's rating, said Fitch Ratings senior director Laura Porter.
Fitch assigns its AA-minus rating with stable outlook, which is on par with the state rating.
"The state on an ongoing basis has really supported the integrity of the trust fund itself, adding new revenues as they need to," Porter said. "We think the incentive to appropriate is so strong that they can be on par with the GO."
New York has $1.01 billion of debt outstanding on its first resolution dedicated highway and bridge trust fund and $5.68 billion on its second resolution.
Standard & Poor's rates the credit AA with a stable outlook and Moody's Investors Service rates the credit Aa3.
The authority yesterday also adopted the recommendations of the state Minority and Women-Owned Business Enterprise Task Force that was created by Gov. David Paterson to boost participation of so-called MWBE firms on state bond deals.
The authority was the last of the five authorities that issue state personal income tax bonds to adopt them. The adoption of the new guidelines has triggered a spate of requests for proposals for underwriting services. Bryan said the Thruway Authority anticipates issuing a request for proposals for underwriters in the fall.
The New York State Environmental Facilities Corp. and the Dormitory Authority of the State of New York issued RFPs for underwriters under the new guidelines last month. Responses to the EFC were due by Jan. 12 and the corporation expects to announce its selection on Feb. 13. DASNY will accept responses until Feb. 3.
The New York State Housing Finance Agency issued its RFP on Jan. 9 and is accepting responses until Jan. 30. The Empire State Development Corp. plans to issue an RFP in the summer.