The New York State Thruway Authority is planning an $850 million bond sale in early May to aid the construction of the estimated $5 billion new Tappan Zee Bridge.
The negotiated transaction scheduled for May 4 will be used toward the replacement of the 61-year old bridge that connects New York’s Westchester and Rockland counties, as well as establishing a debt service reserve account and to pay issuance costs. The authority also plans to borrow an additional $310 million in 2017 and $208.4 million in 2018, according to a preliminary offering statement released last week. The bridge is supposed to be finished in 2018.
Citi and Siebert Brandford Shank & Co. LLC are lead managers. Public Resources Advisory Group is financial advisor with Harris Beach as bond counsel.
The deal is rated A3 by Moody’s Investors Service and A-minus by Standard & Poor’s. Both ratings agencies noted that frequent toll increases will likely be needed by 2020 to pay for new debt for the project.
“The ratings reflect our view of the credit profile on a mature statewide toll road system that will experience a significant increase in leverage, likely requiring frequent rate increases beginning in 2020 or 2021 to maintain margins,” said Standard & Poor's credit analyst Joseph Pezzimenti.
The Tappan Zee Bridge replacement was boosted in large part by a $1.6 billion federal loan under the Transportation Infrastructure Finance and Innovation Act and is also being supported by $1.3 billion in legal settlement funds provided to New York State. The new bridge is being built as part of a public-private partnership by Tappan Zee Constructors in a design-build model.
