$2.4 billion debt for 73 Toll Road, Orange County, Calif., gets IG rating, seeks OK to refinance

By Toni Weeks

San Luis Obispo, Calif., June 12 - The Foothill/Eastern Transportation Corridor Agency announced it is planning to refinance $2.4 billion of debt issued in 1999 for the 73 Toll Road in Orange County, Calif., according to a press release.

Standard & Poor's and Moody's Investors Service have both issued investment-grade ratings on the refinancing.

Specifically, S&P rated all senior-lien bonds, the primary credit of the agency, at BBB-, and Moody's rated them Baa3 with a stable outlook. In addition, S&P rated about $200 million of series 2013B junior-lien refunding bonds at BB+, and Moody's rated them at Ba1 with a stable outlook.

The junior-lien bonds will be issued if market conditions are attractive and if they provide a more cost-effective and more flexible debt structure, the release noted.

The refinance plan, which is subject to approval of the F/ETCA board of directors at a June 13 meeting, will extend the debt to 2053 from 2040 by replacing existing bonds with new, lower-interest-rate bonds. The new bonds will provide for lower annual payments and a lower annual debt service growth rate than the current debt structure.

The difference in payments is expected to result in a positive present value savings, equating to lower required toll-rate increases, more people using the toll roads, more relief of traffic on free routes, improved regional mobility, less congestion and a better local economy.

The refinancing would strengthen the agency's financial situation and provide flexibility to weather future economic downturns and improved cash flow, the release said.

The Irvine, Calif.-based transportation agency manages and operates the 133, 241 and 261 Toll Roads in Orange County, Calif.

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