NTTA bond ratings dropped a notch under weight of TX121 funding
Posted Thu, 2008-02-21 19:53
North Texas Tollway Authority (NTTA) has a groundbreaking ceremony Friday Feb 22 at the heavily fought-over TX121 tollroad project north of Dallas. It's a big media show with heavy construction equipment, previews of cashless highway speed electronic tolling, and a gaggle of local politicians jostling for microphone time.
Earlier this week two of the big rating agencies dropped their ratings of NTTA debt a notch, but the debt is still firmly in their investment grade group. Standard & Poors lowered their rating on NTTA
revenue bonds from A to A- but also assigned the prospects or outlook to "Stable" from Creditwatch.
Moody's assigned the NTTA toll revenue bonds an A2 rating (down from A1) and Outlook stable. Moody's make their rating conditional on bond insurer FGIC for the NTTA
debt getting an adequate rating itself.
NTTA is planning to issue some $1.6b of mostly callable current interest bonds to replace a bit less than a half the $3.5b short term bond anticipation notes issued last November which expire this coming November. They used that to finance the $2.5b one-off upfront payment on the TX121 concession fee paid by NTTA to TxDOT plus $833m lump sum in place of annual payments over the
50 years of the concession. TxDOT will allocate the money to other projects in the greater Dallas region.
Moody's say that NTTA's credit challenges include:
- pressure for additional expensive capital projects not factored into financial projections
- reliance on continued growth in traffic and toll increases to service debt
S&P say their downgrade "reflects the significant additional debt that the authority is incurring, the likelihood of additional debt-financed projects, and an increased reliance on higher growth levels to
support debt service coverage..."
They say that with this issue, the authority's total long-term debt will increase 185% to about $3.8b from about $1.5b.
Supporting the bond rating is:
- NTTA's control over critical parts of the regional network
- historically strong population and income growth in the customer watershed
- unlimited rights to raise toll rates
- system diversification
- a base cases financial model showing 1.7x to 2.4x debt service coverage
Risks are listed as:
- traffic and revenue forecasts for a new facility depending on fringe area growth
- substantial planned toll increases
- relatively high initial toll rates at 9c/km (14c/mile)
- uncertainties in other toll projects also depending on system pledged revenue
NTTA Board Chairman Paul N. Wageman was quoted in an Authority statement: "These ratings are consistent with our expectations and indicative of the NTTA System’s financial strength and stability. We have a sound financial plan to permanently finance SH 121, a truly superior project."
On TX121
TX121 is 42km (26 miles) long and runs southwest-northeast across the north of the Dallas region, north of the President Geo Bush Turnpike (PGBT). It will have six main lanes tolled by all electronic tolling plus 3 lanes of free service roads on each side. TxDOT has the project partially constructed and a portion is already tolled. Â
The work is divided into five segments. 1 and 2 segments are due for completion September this year and the three remaining ones Jan 2010, Jan 2011, Jan 2012.
Last year after TxDOT had selected a private concessionaire (Cintra) NTTA said it could top that concession and the private sector procurement was called off, and the concession awarded to NTTA - which is the regional public toll authority.
Other NTTA projects
NTTA is also working on:
- a new Lewisville Bridge and road approaches west of the DNT
- a new eastern extension of the President George Bush Turnpike (PGBT)
Â
- northern extensions of the Dallas North Tollway (DNT)
- Southwest parkway Ft Worth
- Trinity parkway along the Trinity River
- a possible concession on TX161 midway between Dallas and Ft Worth
- conversion to cashless or all electronic toll collection throughout the tollroad network
TOLLROADSnews 2008-02-21
North Texas Tollway Authority (NTTA) has a groundbreaking ceremony Friday Feb 22 at the heavily fought-over TX121 tollroad project north of Dallas. It's a big media show with heavy construction equipment, previews of cashless highway speed electronic tolling, and a gaggle of local politicians jostling for microphone time. Earlier this week two of the big rating agencies dropped their ratings of NTTA debt a notch, but the debt is still firmly in their investment grade group. Standard & Poors lowered their rating on NTTA
revenue bonds from A to A- but also assigned the prospects or outlook to "Stable" from Creditwatch.Moody's assigned the NTTA toll revenue bonds an A2 rating (down from A1) and Outlook stable. Moody's make their rating conditional on bond insurer FGIC for the NTTA
debt getting an adequate rating itself.NTTA is planning to issue some $1.6b of mostly callable current interest bonds to replace a bit less than a half the $3.5b short term bond anticipation notes issued last November which expire this coming November. They used that to finance the $2.5b one-off upfront payment on the TX121 concession fee paid by NTTA to TxDOT plus $833m lump sum in place of annual payments over the
50 years of the concession. TxDOT will allocate the money to other projects in the greater Dallas region. Moody's say that NTTA's credit challenges include:
- pressure for additional expensive capital projects not factored into financial projections
- reliance on continued growth in traffic and toll increases to service debt
S&P say their downgrade "reflects the significant additional debt that the authority is incurring, the likelihood of additional debt-financed projects, and an increased reliance on higher growth levels to
support debt service coverage..."They say that with this issue, the authority's total long-term debt will increase 185% to about $3.8b from about $1.5b.
Supporting the bond rating is:
- NTTA's control over critical parts of the regional network
- historically strong population and income growth in the customer watershed
- unlimited rights to raise toll rates
- system diversification
- a base cases financial model showing 1.7x to 2.4x debt service coverage
Risks are listed as:
- traffic and revenue forecasts for a new facility depending on fringe area growth
- substantial planned toll increases
- relatively high initial toll rates at 9c/km (14c/mile)
- uncertainties in other toll projects also depending on system pledged revenue
NTTA Board Chairman Paul N. Wageman was quoted in an Authority statement: "These ratings are consistent with our expectations and indicative of the NTTA System’s financial strength and stability. We have a sound financial plan to permanently finance SH 121, a truly superior project."
On TX121
TX121 is 42km (26 miles) long and runs southwest-northeast across the north of the Dallas region, north of the President Geo Bush Turnpike (PGBT). It will have six main lanes tolled by all electronic tolling plus 3 lanes of free service roads on each side. TxDOT has the project partially constructed and a portion is already tolled. Â
The work is divided into five segments. 1 and 2 segments are due for completion September this year and the three remaining ones Jan 2010, Jan 2011, Jan 2012. Last year after TxDOT had selected a private concessionaire (Cintra) NTTA said it could top that concession and the private sector procurement was called off, and the concession awarded to NTTA - which is the regional public toll authority.
Other NTTA projects
NTTA is also working on:
- a new Lewisville Bridge and road approaches west of the DNT
- a new eastern extension of the President George Bush Turnpike (PGBT)
Â
- northern extensions of the Dallas North Tollway (DNT)
- Southwest parkway Ft Worth
- Trinity parkway along the Trinity River
- a possible concession on TX161 midway between Dallas and Ft Worth
- conversion to cashless or all electronic toll collection throughout the tollroad network
TOLLROADSnews 2008-02-21