The Metropolitan Atlanta Rapid Transit Authority (MARTA) is embarking on a significant financial initiative as it prepares to enter the market with a new issuance of green bonds rated AAA. This strategic move aims to refund previous issuances from 2020 and 2021 while simultaneously funding upgrades to its essential rolling stock. With sustainability and improved transit experiences at the forefront, MARTA is exploring innovative solutions to enhance its transportation system.
At a recent event held on January 30, 2023, MARTA General Manager and CEO Collie Greenwood expressed his enthusiasm for the future of the agency’s rail system. As he boarded one of the new trains, Greenwood remarked, “It felt like stepping into the future.” The agency is committed to providing a cleaner and safer transit experience for its passengers, aiming to inspire both the staff and travelers. These new railcars symbolize a promise of innovation and efficiency, reassuring riders that their journeys will become not just practical, but also enjoyable.
The planned issuance comprises two tranches of sales tax revenue bonds—$331.7 million from series 2025A and $143.2 million from series 2025B. Funds from series A will specifically target vital capital projects, including the procurement of new railcars and enhancements to safety measures throughout the transit system. In 2019, MARTA’s board sanctioned the acquisition of 224 new railcars from Stadler Rail, a Swiss company recognized for its technological advancements in train manufacturing. With this considerable investment over $600 million, the first trains are anticipated to be operational by late 2025, revolutionizing the rail transit experience over the next three and a half years.
MARTA’s strategic financial plan includes refunding portions of older series bonds through the sale of series 2025B. This refinancing effort is coupled with seizing favorable market conditions to optimize debt servicing through a tax-exempt refunding structure. Such initiatives help maximize financial efficiency for MARTA, which was last in the market in May with a sizable $314 million offering.
The new bond series are structured with specific features that include optional redemption provisions, allowing for strategic financial planning. Series A carries an option for redemption starting in January 2035, while series B maintains its final maturity without an optional redemption until 2038. Both series will enjoy exemptions from federal and Georgia state income tax, making them particularly attractive to investors.
Leading the charge in this financial venture are senior managers Wells Fargo Securities, alongside co-senior managers Jefferies and J.P. Morgan. The expertise of financial advisors like PFM, along with bond counsel from Holland & Knight, exemplifies the comprehensive approach MARTA is taking to ensure the successful guidance of this bond issuance. Ratings from S&P Global Ratings and Kroll Bond Rating Agency have positioned these bonds favorably, underscoring the trust in MARTA’s financial stability.
A critical factor in the success of this bond issuance is the robust backing by sales tax revenues and the underlying economic strength of the Atlanta metropolitan area. Strategically, MARTA has positioned itself to leverage anticipated growth in sales tax revenue, supported by the increasing population in the region, which surged from 4.33 million in 2015 to over 5 million in 2022. This growth provides a solid foundation for revenue generation, as seen in fiscal year 2024, during which sales tax revenues reached a significant $721.5 million.
Analysis from credit experts has highlighted that MARTA’s mechanisms for debt servicing exhibit strong resilience. Current forecast coverage ratios stand at an impressive 4.57 times maximum annual debt service. This not only indicates effective management of existing obligations but also affirms a proactive capacity for accommodating new debts without jeopardizing financial health.
MARTA’s green bond initiative aligns with a broader aim of investing in sustainable transportation solutions that will ultimately benefit both the environment and the community. The funds raised will facilitate the acquisition of electric trains and buses, along with renovation projects at rail stations, demonstrating MARTA’s commitment to reducing its carbon footprint and enhancing transit accessibility.
As MARTA looks towards the future, its vision goes beyond immediate upgrades. The institution is determined to enhance urban mobility while addressing environmental concerns, thereby positioning itself as a beacon of sustainable public transport in the southeastern United States, particularly as urban populations continue to grow.
With careful planning and a strategic approach, MARTA is setting the stage for a transformative era in public transportation that prioritizes not only efficiency and safety but also sustainability—a goal that serves the interests of the community and the environment alike.
Leave a Reply