North Carolina Turnpike splits Triangle Exwy financing to sell bonds in rough market

North Carolina Turnpike Authority (NCTA) has a new financing strategy to move the Triangle Expressway project that has been stalled the past seven months by the financial meltdown - doing revenue bonds and gap-bond sales separately. Chief executive of the Turnpike David Joyner told us today: "We've got a new plan of finance that we're hopeful will get us out of the impasse. It's a bifurcation of the revenue into two streams to service two separate sets of bonds."

PFM Group out of their Orlando FL office are NCTA's financial advisers, and they are working with Assured Guaranty of New York City to get bond insurance.

The Triangle Expressway project on the western side of the Raleigh metro area is an approx-$1.0 billion project to build 2x3 lanes in a Y-plan that is a major new segment of a belt route and provides north-south connectivity.

It is 30.3km (18.8 miles) of roadway with eleven interchanges.

The tollroad will use all-electronic tolling, for which a procurement is under way.

Permitting is complete and design-build contractors for the civil works were chosen last August in the hope of starting construction in the fall.

However an inability to sell bonds has had the project on hold.

AA rating needed

Joyner says in the last couple of weeks they've come up with a plan they are hopeful will lift the project into a 'AA' rating and allow bond sales to proceed.

Under the new plan they'd float:

- $300m to $400m of toll revenue bonds

- $200m to $300m of gap fund bonds

- $413m of approved US Government TIFIA loans

At present interest rates they'd pay 6.9% on senior debt and 3.57% on TIFIA for a weighted average interest rate of 5.7%.

Gap funding will be provided on an annual basis from the state budget, starting at $25m/year.

Released today the Governor's budget confirms the gap funding commitments to the Triangle Expressway made previously.

Joyner says they're hoping for feedback from the rating agencies by mid-March on the new plan of finance.

If they get a positive response they plan to proceed to get pricing of the bonds in April and to complete a financing by May 1.

A go-ahead for construction would see the first northern segment of the project open two years later in mid-2011, and the remainder by about the end of 2012.

http://www.ncturnpike.org

TOLLROADSnews 2009-03-17