NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) announces the preliminary rating of BBB- for the Orange County Transportation Authority Toll Revenue Senior Bonds, 2017 TIFIA Series, which evidences the $627 million loan from the United States Department of Transportation to the Orange County Transportation Authority (OCTA). The TIFIA Loan constitutes federal project credit assistance under the Transportation Infrastructure Finance and Innovation Act for the Interstate 405 Improvement Project (“the Project”) located in Orange County, California.
The TIFIA loan will have a senior-lien priority in project revenues. The interest rate will be set at closing at the 30-year U.S. Treasury State and Local Government Series rate plus 0.01%. The actual maturity of the TIFIA Loan is limited to the earlier of 35 years after substantial completion of the Project (68 months after financial close) or December 1, 2057. Interest on the TIFIA loan will be paid semi-annually while principal will be paid annually. The TIFIA loan will fully amortize by the projected maturity date, and therefore there is no refinancing risk in the transaction. Proceeds of the TIFIA loan will be used to fund a portion of design-build and other costs for the Project, which are currently estimated at $1.9 billion. Other sources of funds for such costs include OCTA’s Measure 2 sales tax revenue, sales tax revenue bonds issued in relation thereto and various federal and State funds and grants. Senior debt service coverage ratios for the TIFIA Loan average 3.35x under KBRA’s rating case and stressed assumptions KBRA used in analyzing project cash flows include higher construction and O&M costs, and lower traffic volumes.
The Project consists of the design-build, operations and maintenance of improvements to approximately 16 miles of the I-405 freeway. The Project will add one general-purpose lane in each direction from Euclid Street north to the I-605 interchange at the Los Angeles County line and one tolled express lane in each direction from SR-73 in Costa Mesa north to SR-22. The new tolled express lanes will be combined with the existing high-occupancy vehicle (HOV) lanes to create the I-405 express lanes (two express lanes in each direction) in the I-405 median from State Route 73 to Interstate 605. The Project is expected to reduce congestion for motorists using the I-405.
OCTA is partnering with the California Department of Transportation and the Federal Highway Administration in the implementation of the Project and to ensure that Project development is in compliance with all applicable federal laws and regulations. Other key project participants include OC 405, a joint venture between OHL USA, Inc. and Astaldi Construction Corporation, as design-build contractor, Parsons Transportation Group Inc., as independent engineer and OCTA’s project and construction management consultant, and Stantec Consulting Services Inc., as traffic and revenue consultant.
KBRA analyzed the transaction using the Project Finance Rating Methodology published on November 15, 2013. KBRA will review the final operative agreements and legal opinions for the transaction prior to closing.
The preliminary rating is based on information known to KBRA at the time of this publication. Information received subsequent to this release could result in the assignment of a final rating that differs from the preliminary rating.
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Preliminary Rating Assigned: Orange County Transportation Authority Toll Revenue Senior Bonds, 2017 TIFIA Series
| Debt Instrument | Rating / Outlook | Initial Principal Balance | ||||||
| Toll Revenue Senior Bonds | BBB- / Stable | $627,000,000 | ||||||
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