Delayed amid pandemic, Kentucky refunding now hinges on rates
The Kentucky Public Transportation Infrastructure Authority has approved the sale of up to
Delayed during the COVID-19 pandemic, the refunding now depends on how much savings can be achieved in the rising interest rate environment.
In 2018, the KPTIA began looking at opportunities to pay off the U.S. Department of Transportation's TIFIA loan, which has a 3.88% interest rate. In 2019, it began the process to issue tax-exempt refunding bonds, according to a presentation by KPTIA’s financial advisor, Public Financial Management.
The sale, along with a tender offer, would have also paid off debt from the 2013 sale of
The highlights of the Louisville-Southern Indiana Ohio River Bridges project are the two new bridges, the
Last September, the authority planned to issue
However, a tender exchange for some of the bonds issued was made in 2021,
He said some of the existing bondholders tendered their 2013 bonds in exchange for new tax-exempt bonds; for those bonds that were not tendered or exchanged, KPTI sold an advance refunding taxable issue.
“The total amount of the bonds all together was around
On Monday, KPTIA authorized PFM to move ahead with a tax-exempt sale with the exact timing to be determined at the discretion of the financial advisor and bond counsel when market conditions seem appropriate.
PFM said it is looking at purchasing bond insurance so as to get a higher credit rating and lower interest rate on the deal.
Last year ahead of the taxable refunding, Moody's Investors Service (MCO) raised the underlying rating of KPTIA to Baa2 from Baa3 and Fitch Ratings' upgraded its underlying rating on the authority to BBB from BBB-minus. Fitch also lifted its outlook to positive; Moody's assigned a stable outlook. The bonds were insured by Assured Guaranty (AGO) Municipal Corp.
The goal for the upcoming deal is to achieve savings of at least 1% of the aggregate principal amount of the refunded loan amount. The TIFIA loan has a current balance of
While this goal is lower than the KPTIA's typical target, the refunding can provide additional benefits by eliminating any possible revenue sharing with TIFIA, and reducing reporting requirements.
“As of earlier this year, we were estimating quite a bit of savings by using this strategy,
“So while we have started taking the initial steps to do a refunding, at this point in time we would not execute a refunding because we would not have the savings levels we think are adequate,” he said.
Still, he noted that the authority’s vote to approve a refunding now gives it the flexibility to move quickly if market conditions become more favorable.
Last week, Gov.
He said it makes substantial new investments in infrastructure, such as high-speed internet, cleaner water, and in roads and bridges, while making it easier for businesses to move into the state.
“These are the areas we must invest in today to help the commonwealth become a national leader by turning two years of incredible progress into 20 years of prosperity for Kentucky’s families,” Beshear said in a statement. “With these dollars, we are going to make major investments in critical infrastructure needed to build a better
The governor’s budget proposal was based on a record revenue surplus, with the General Fund seeing
The state will see an additional
Last year, Kentucky’s Broadband Deployment Fund was created with
For transportation, the budget provides
Beshear said these one-time funds are meant to give flexibility in meeting state-match requirements for expected federal grants.
The governor said that with all the businesses moving to
Additionally, the budget expands on efforts to improve water and sewer systems and includes
Kentucky’s seasonally adjusted preliminary February unemployment rate was 4.2%, the Kentucky Center for Statistics said late last month.
The preliminary February jobless rate was down 0.2 percentage points from the 4.4% reported in January and down 0.5 percentage points from the 4.7% recorded in the same period one year ago.
The U.S. seasonally adjusted jobless rate for February was 3.8%, down from 4% in January, according to the U.S. Labor Department.
The state of