The North Texas Tollway Authority (NTTA) is currently in the process of seeking savings through bond refundings and tenders in a $1.126 billion deal. This deal, which is the highlight of this week’s municipal bond sale calendar, includes two series of tax-exempt debt totaling $446.14 million and nearly $680 million, respectively. The NTTA’s Chief Financial Officer, Horatio Porter, has highlighted the benefits of this tender offer, emphasizing the opportunity to capture savings by purchasing bonds at a discount.
Porter mentioned that the tender offer allows bondholders to exchange debt sold at low-interest rates for higher-yielding securities, presenting a significant savings opportunity for the NTTA. The agency is estimating present value savings of about $90 million or 7% to 8% through the refunding portion of the deal. Despite the decrease in federal subsidies on taxable Build America Bonds, the NTTA has chosen not to redeem its outstanding debt from 2009, as it does not find it economically attractive at the moment.
As of June 30th, the NTTA had $6.33 billion of first-tier and nearly $2.64 billion of second-tier bonds outstanding. Despite a decline in traffic and revenue during the COVID-19 pandemic, the agency has managed to bounce back and exceed 2019 levels. The debt service coverage ratios have also shown improvement, rising to 1.57 times in 2023. The agency’s Comprehensive Traffic & Toll Revenue Study projects an increase in toll revenue from $1.19 billion in 2024 to $2.42 billion in 2040.
The NTTA has received favorable bond ratings from Moody’s Ratings and S&P Global Ratings, reflecting its strong market position, financial risk profile, and management. Moody’s upgraded the agency’s ratings to Aa3 for first-tier bonds and A1 for second-tier bonds, while S&P upgraded them to AA-minus and A-plus, respectively. Both agencies have acknowledged the NTTA’s essential roadway network, steady traffic growth, and strong revenue trends.
Looking ahead, the NTTA is focused on capital improvement projects aimed at maintaining and expanding its infrastructure. The agency’s $2 billion, five-year program from 2024 to 2028 includes major maintenance, rehabilitation, and capacity improvements. Porter emphasized that the agency plans to fund these projects using cash from operations, ensuring that they do not anticipate borrowing money for them.
The North Texas Tollway Authority’s bond refunding deal showcases its strategic financial management and commitment to maintaining a strong financial position. By capitalizing on savings opportunities through bond tenders and refundings, the NTTA is well-positioned to support its future growth and infrastructure development initiatives. Despite challenges posed by the pandemic, the agency has demonstrated resilience and adaptability in navigating uncertain market conditions.