In another move to strengthen the finances for Orange County’s toll road system, $125 million of bonds were remarketed today at a highly favorable long-term interest rate of 3.95 percent.
The bonds were originally issued in 2013 by the Foothill/Eastern Transportation Corridor Agency with a five-year term as part of the refinancing of the original bonds issued to fund construction of the 133, 241 and 261 Toll Roads.
While the bonds could be remarketed for any term, the agency decided to remarket the bonds to their final maturity of January 15, 2053, as long-term interest rates were more favorable in the current market than short-term rates. Remarketing to the bonds’ final maturity also eliminated the need to remarket the bonds at future dates at unknown interest rates. Demand for the $125 million bond offering topped $1 billion, across 35 investors, resulting in a repricing of bonds to a 3.95 percent yield.
“Reducing interest payments and establishing certainty with respect to the interest rate, reduces the overall cost of operating The Toll Roads and strengthens the Agency’s financial outlook,” said Amy Potter, Transportation Corridor Agencies’ CFO.
The Foothill/Eastern Agency bonds were recently upgraded by Moody’s Investor Service and affirmed by Fitch Ratings, reflecting an increase in both transactions and revenue for four consecutive years as well as the service area’s strong economy. The Foothill/Eastern Agency toll road system, comprised of SR 133, SR 241 and SR 261, had an impressive 9.4 percent growth in transactions in FY16.
“More people are using Orange County’s toll roads every day. The growth in drivers and accounts, along with conservative and steady fiscal policies and a strong local economy, provides a solid financial foundation for The Toll Roads,” said Michael Kraman, CEO of the Transportation Corridor Agencies. “The recent rating upgrades and today’s $125 million bond remarketing transaction further demonstrates that tolling is a viable business model to help solve our regional traffic problems without an over-reliance on shrinking state and federal dollars.”
The Transportation Corridor Agencies (TCA) is comprised of two joint powers authorities (San Joaquin Hills and Foothill/Eastern Transportation Corridor Agencies) created to plan, finance, construct and operate Orange County’s Toll Road network – the 73, 133, 241 and 261 Toll Roads. The Toll Roads have been providing a choice for drivers for more than 20 years and the tolls collected are used to fund debt service issued to construct the 51-mile toll road system, operations and capital projects.
