BATA Sets $500M Toll Deal

The Bay Area Toll Authority plans to issue $500 million in variable-rate toll revenue bonds this month. The bonds will be matched with an existing forward swap agreement. For BATA, which has conducted a number of complex financings during the course of its toll bridge upgrade program, “this is as plain-vanilla a thing as we do,” chief financial officer Brian Mayhew said this week. Lehman Brothers is running the books on this month’s transaction. In advance of the deal, all three rating agencies affirmed their underlying long-term ratings of BATA toll revenue bonds, which are secured by the tolls on the seven state-owned toll bridges in the San Francisco metropolitan area. Fitch Ratings rates the debt AA-minus with a stable outlook, Moody’s Investors Service assigns its Aa3 rating and stable outlook, and Standard & Poor’s rates the debt AA with a stable outlook. “The AA rating reflects a very strong business position and a diversified portfolio of assets, as well as a solid forecast of financial coverage and liquidity levels,” Standard & Poor’s analyst Mary Ellen Wriedt said in a news release Monday. “With a near monopoly of seven out of the eight bridges crossing the San Francisco Bay and a moderate toll rate, demand for the bridge system continues to be very strong, reflective of the critical role it plays in the regional economy.” This month’s bond issue will carry long-term insurance from triple-A rated Ambac Assurance Corp., and the variable-rate demand obligations will be backed with bank liquidity support. This month’s deal marks BATA’s eighth toll-revenue financing and with it the authority will have issued about $5.4 billion in debt backed by bridge tolls. The largest project financed by the tolls is the ongoing construction of a replacement for the east span of the San Francisco-Oakland Bay Bridge. The financing pace will slow down after this issue, Mayhew said. “We’ll be done for a while,” he said. “We should have enough money in the bank to carry us for about a year, a year-and-a-half.”