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NTTA Prices $1.42 in Bonds to Fund Mobility Solutions On Aug. 3, the NTTA priced three series of revenue bonds totaling $1.42 billion. The majority of the proceeds of this sale will be used to fund the completion of construction on the Sam Rayburn Tollway, President George Bush Turnpike Eastern Extension and Lake Lewisville Toll Bridge and to provide new money for capital improvements and the feasibility study fund. A portion of the proceeds will be used to refund and/or remarket previous bond issues as well as fund a partial termination payment in conjunction with interest rate swap agreements entered into in 2004 and 2005.
The bonds, given “A” category ratings by Moody’s and Standard & Poor’s, consisted of approximately $418 million in first tier, tax-exempt current interest bonds (Series 2009A), $825 million in first tier, taxable current interest Build America Bonds (BABs) (Series 2009B) and $178 million of first tier, tax-exempt current interest bonds (Series 2005C), which are being remarketed as fixed rate bonds. The Series 2005C bonds were originally issued as variable rate bonds. Interest rates for the Series 2009A bonds and the Series 2005C bonds ranged from 3 percent for the shortest maturities to 6.25 percent for the longest maturities. The effective interest rate to NTTA for the Series 2009B BABs, which were over-subscribed by more than 200 percent, were priced at 230 basis points over the 30-year Treasury Bond yield of approximately 4.37 percent after the 35 percent rebate.
The Series 2009B BABs are a new type of municipal bond created under the American Recovery and Reinvestment Act of 2009. Each six months the Federal government will pay to the trustee for the bonds an amount equal to 35 percent of the interest on the BABs. This rebate from Washington is what converts the 6.718 percent taxable interest rate on the BABs to the 4.418 percent effective rate to the NTTA.
“I’m pleased our bonds were well-received by the market, including the new buyers that were attracted by the Build America Bonds,” said NTTA Chief Financial Officer Janice Davis. “The funds generated by this sale will be used to advance critical mobility projects North Texas.”
Morgan Stanley was the book-running senior underwriter for the Series 2009A bonds and remarketed Series 2005C bonds with J.P. Morgan, Merrill Lynch & Co., M.R. Beal & Company and Ramirez & Co., Inc. serving as the remaining underwriters for the two issues. Goldman, Sachs & Co. was the book-running senior underwriter for the Series 2009B bonds with Citi, Morgan Stanley, Wells Fargo Securities, BOSC, Inc., Estrada Hinojosa & Company, Inc., Jefferies & Company, Inc., and Rice Financial Products Companies serving as other underwriters for the BABs. McCall, Parkhurst, Horton L.L.P and Mahomes Bolden Warren Sigmon, PC served as co-bond counsel on both transactions. RBC Capital Markets serve as the NTTA’s Financial Advisor.
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