The North Texas Tollway Authority (NTTA) is embarking on a $1.126 billion deal that involves seeking savings through bond refundings and tenders. The tax-exempt debt offered in two series includes $446.14 million of first-tier revenue bonds to finance a tender offer for taxable bonds sold in 2020 and 2021, as well as to refund 2015 Series B bonds for debt service savings. Additionally, nearly $680 million of second-tier bonds will be used to refinance 2015 Series A bonds. Horatio Porter, the CFO of NTTA, highlighted that the tender offer presents an opportunity for bondholders to shed low-interest debt and invest in higher-yielding securities, considering the current market conditions.
Financial Strategies Implemented by NTTA
The NTTA aims to capture savings by purchasing bonds at a discount through the tender offer. Porter emphasized that the agency anticipates present value savings of about $90 million or 7% to 8% through the refunding portion of the deal. Despite the trend of muni issuers redeeming taxable Build America Bonds due to declining federal subsidies, NTTA has chosen not to pursue this path. The agency’s prudent financial decisions have enabled it to maintain a strong financial position amidst the challenging economic climate.
Despite the adverse impact of the COVID-19 pandemic on traffic and revenue, NTTA’s tollways in the Dallas-Fort Worth region have experienced a rebound surpassing 2019 levels. Debt service coverage ratios have improved, reflecting the authority’s resilience and adaptability. The agency’s Comprehensive Traffic & Toll Revenue Study projects a steady increase in toll revenue over the upcoming years, indicating positive growth prospects for NTTA.
Regional Development and Population Trends
The Dallas-Fort Worth-Arlington metro area’s population surge underscores the attractiveness of the region for residents and businesses alike. With the influx of new residents, NTTA is focused on expanding its infrastructure to accommodate growth and enhance connectivity. The authority’s bond ratings have consistently improved, indicating investor confidence in NTTA’s financial stability and long-term viability.
Looking ahead, NTTA plans to fund its capital improvement program through cash from operations, further solidifying its financial foundation. The agency’s commitment to enhancing its roadway network and implementing maintenance projects highlights its proactive approach to infrastructure development. With a robust underwriting team overseeing the current bond sale, NTTA remains poised to navigate future challenges and capitalize on opportunities for sustainable growth.
Through a combination of strategic financial decisions, operational resilience, and regional growth dynamics, the North Texas Tollway Authority continues to position itself as a leading infrastructure entity in the Dallas-Fort Worth area. As the organization navigates evolving market conditions and investor expectations, its focus on long-term sustainability and prudent financial management will be instrumental in driving success and creating value for stakeholders.