Orange County, Calif., toll operator's early payments achieve savings

Transportation Corridor Agencies

The San Joaquin Hills Transportation Corridor Agency in Orange County, California, paid off $200 million in bond debt early saving the agency approximately $203 million in future interest payments.

The Transportation Corridor Agencies, which operates both the SJHTCA and the Foothill/Eastern Transportation Corridor Agency, has received several bond upgrades and outlook revisions over the years for its fiscal prudence.

The early pay down of $200 million in junior lien debt for SJHTCA in January is part of the agency's strategic plan to reduce debt and implement strategies for cost savings, said SJHTCA board chair and Santa Ana City Councilmember David Penaloza. The early payment "affirms TCA's commitment to fiscal responsibility," Penaloza said.

The agency used cash reserves in January to make early payments of principal on bonds issued in 2014 that are maturing in 2044 and 2049.

The SJHTCA and F/ETCA are two joint powers authorities created to plan, finance, construct and operate the 420 lane miles that comprise the 73, 133, 241 and 261 toll roads.

In February 2024, Fitch Ratings upgraded F/ETCA's senior lien bonds from BBB-plus to A-minus and its junior lien bonds from BBB to BBB-plus. Moody's Investors Service also upgraded F/ETCA's bonds from Baa2 to Baa1.

"The rating upgrade reflects an improved credit profile driven by the combination of the agency's prudent debt management strategies through bond buybacks alongside traffic and revenue performance that has exceeded Fitch's case expectations," Fitch analysts said of the upgrade of the F/ETCA debt. "Management demonstrated its commitment to paying down debt when opportunities arise at bond call dates as well as opportunistically through open-market bond buybacks, which will support debt service reductions over the long term."

Transportation Corridor Agencies

In February 2024, Fitch Ratings affirmed SJHTCA's senior bonds at BBB-plus and its junior bonds at BBB. Fitch also revised the rating outlook from stable to positive.

By 2030, the TCA said it plans to pay down another $730 million of bonds early, saving an additional $603 million in interest.

The board-approved early pay down program is part of a multi-year plan, which includes several bond pay down opportunities through 2030 for both the SJHTCA and the Foothill/Eastern Corridor Agency.

In 2024, F/ETCA paid down $60 million in bonds early using cash reserves. This saved the agency about $54 million in interest payments.

"When the bonds are callable, we take action on early pay down opportunities, while also protecting the agencies' ability to fund operations and capital projects," Penaloza said. "These prudent policies have produced long-term cost savings over time that have result in solid financial management, which is core to the agencies' past and future success."

The Bond Buyer named F/ETCA's four-part series $759.8 million senior lien toll road refunding bonds priced by Goldman Sachs & Co. the Far West Region Deal of the Year in 2021.