U.S. transportation bond sales increased by almost two-thirds in 2024 to $75.36 billion, as state agencies and local authorities stepped up financing for airports, toll roads and mass transportation.
The surge in issuance was led by the Florida Development Finance Corp., the New Jersey Transportation Trust Fund and the New York Transportation Development Corp., which closed the three biggest transportation deals of the year, each worth more than $2.5 billion. The number of transportation issues surged to 529 last year from 405 in 2023, according to LSEG data.
The growth in transportation bond volume was driven by rising construction costs and increased demand for infrastructure improvements as the nation continued to recover from the COVID pandemic, said Kurt Forsgren, managing director at S&P Global Ratings.
Forsgren anticipates continued growth in transportation bond volume this year. He said some transit operators may face funding hurdles, however, as they exhaust their remaining COVID aid under the American Rescue Plan Act of 2021 against a backdrop of waning federal support under the new administration in Washington.
One of President Donald Trump's first executive orders took aim at federal grants flowing to local transportation and infrastructure projects, causing indignation among House Democrats and some "panic" among state transportation officials. Forsgren said tariffs also could "rock the boat" economically but wouldn't capsize the infrastructure sector, which S&P Global rates as stable.
"If things are clawed back, we may change our view on federal grant-secured transactions," Forsgren said. But it won't reduce the demand for transportation deals, he said. "It doesn't matter what color your state is. People like roads."
New Jersey TTFA closed two of the 10 biggest transportation deals of the year, a $3.25 billion transaction senior managed by BofA Securities in October and a $1.5 billion sale in November led by Barclays.
"New Jersey TTFA borrowing programs are well established and well known, and their linkage to the state is what supports the credit quality of the borrowing," said Fitch Ratings Senior Director Doug Offerman.
New Jersey TTFA is among the state's biggest borrowing programs, he said, with over $15 billion of bonds outstanding.
The $3.2 billion transaction was a refunding of previously issued debt, allowing the trust fund to lower its borrowing costs. "To maintain high quality transportation systems, reinvestment is constantly needed," Offerman said. Fitch has an A rating on New Jersey TTFA, one notch below the state's A-plus rating.
Florida Development Finance Corp.'s $3.14 billion sale for the Brightline rail system in April, the second largest transportation bond transaction of 2024, won Bond Buyer's 2024 Deal of the Year award, having topped the Innovative Financing category. It was the largest private-activity bond issuance and the first investment-grade debt for American high-speed rail.
Among other transportation deals honored by The Bond Buyer in 2024 was a $1.32 billion financing for Dallas Fort Worth International Airport that won Southwest regional Deal of the Year. Louisiana Public Facilities Authority's $1.33 billion financing for the I-10 Calcasieu River Bridge replacement was the Deal of the Year winner in the Public-Private Partnership category.
Mass transportation bonds accounted for the biggest increase in issuance from 2023. Mass transportation bond volume more than doubled to $27.8 billion, while the number of mass transit deals jumped to 67 from 48. Financings for toll roads, highways and streets increased 56% from 2023 to 17.6 billion, while airport issuance jumped 37% to $22.37 billion.
Bond volume for mass transportation projects soared 160% to $27.85 billion, while toll roads, highway and street deals increased 56% to $17.6 billion. Bond volume for airports in 2024 jumped 37% from the previous year to $22.37 billion. Bridge projects rose to $4.89 billion in 27 transactions from $3.85 billion in 15 transactions in 2023. Seaport transactions fell 24% to $2.36 billion, LSEG reported.
Tax-exempt transportation deals increased 75% to $52.1 billion, while taxable deals slipped 30% to $1.85 billion.
New money deals accounted for $46.78 billion of transportation volume, up 69% from 2023, while refunding transactions rose 41% to $19.52 billion. Combined money deals more than doubled to almost $9.1 billion.
Revenue bonds continued to dominate the transportation sector, rising 59% to $66.64 billion, even as general obligation bonds more than doubled to $8.7 billion. About 92% of the transportation issuance, or $69.6 billion, was in fixed-rate bonds in 2024. That was about the same percentage as in 2023, when issuers sold $42.15 billion of bonds with fixed rates, out of a total of $45.46 billion.
The volume of insured transportation bonds rose 72% to $7.4 billion. The number of insured transactions rose to 188, from 142 in 2023.
State agencies were the biggest issuers, accounting for $42.64 billion of volume, up 95% from 2023. Local authorities closed $14.67 billion of transportation bonds in 93 transactions, compared with $11.98 billion in 85 transactions in 2023.
Bank qualified issuance rose 19% to $421.5 billion.
