The Maine Turnpike Authority moved up its $100 million refunding deal to Tuesday from Wednesday.
The turbulent news cycle and financial markets almost led the deal team to scrap the refunding, but on Monday, the authority decided to take advantage of market conditions.
The deal consists of two series. The first, $91.98 million of revenue refunding bonds, will refund all or a portion of the authority's 2015 turnpike revenue refunding bonds. The bonds feature maturities from 2026 through 2038, with possible redemption in 2035.
The second series, $16.51 billion of special obligation bonds, will refund all or a portion of the special obligation bonds the MTA issued in 2014. This tranche is non-callable, with maturity dates from 2026 through 2034.
The first tranche was rated Aa3 by Moody's Ratings and AA-minus by Fitch Ratings and S&P Global Ratings. The second tranche was rated A2 by Moody's, A-plus by S&P and A by Fitch.
The negotiated deal was originally scheduled for pricing Wednesday, but the deal team decided Monday afternoon to move it forward a day.
MTA CFO John Sirois said the team wanted to "take advantage of the positive movement in the market."
BofA Securities is the deal's senior manager, with co-managers FHN Financial, Loop Capital Markets, Raymond James, Siebert Williams Shank & Co. PRAG is financial advisor for the transaction, and Mintz is the bond counsel.
The MTA hopes to achieve $6 million to $7 million of savings through this deal, Sirois said. But on Friday, the team was considering putting a "pause" on the refunding based on the market's performance during the preceding week and a half.
"When we first initiated this project back in January, we were under the full awareness of what may happen coming out of Washington," Sirois said, and the "fluctuation in the market that could affect the ultimate refunding."
Traffic on the turnpike grew by an average of 4.5% every year since 2021. Net toll revenue has grown by an average of 7.4% annually, according to the deal's investor presentation.
The authority projects annual traffic growth of 1.5% a year — Sirois called this a conservative estimate — and expects to raise tolls by 15% in 2028, according to the presentation. Based on these projections, the MTA expects to have 3.33x debt service coverage this year and 3.75x in 2028.
Fitch noted the turnpike revenues bonds are supported by a cash debt service reserve fund, while the special obligation bonds have a "weaker" debt structure.
"The special obligation lien's weak sum sufficient covenant and additional bonds test, coupled with structural subordination, provide for weaker bondholder protection," Fitch's analysts wrote.
The MTA has not experienced any material effects from the federal government or the threat of tariffs, Sirois said. In his view, the biggest threat to the authority comes from the economy.
"We are in so much flux right now with what's going on with the new administration. It's hard to tell what the impacts will be," Sirois said. "What's going on globally could impact us, whether we go into a recession. There's so many factors involved."
This is the MTA's first bond issuance in three years. The authority has not priced a new-money deal since 2020.
This is investors' last opportunity to buy the turnpike's bonds for the foreseeable future, Sirois said. There are no plans for other issuances in the next five years, although that could change if the authority accelerates plans for some large infrastructure projects.
The authority's 2025-2029 capital program is approximately $275 million and will be funded by its revenues, rather than debt, according to the investor presentation.
