A subsidiary of the Florida Department of Transportation sold over $174 million in bonds to finance a refund to a previous bond issuance.
The bonds, issued by the Florida Turnpike Enterprise (FTE), will be payable by revenues from the Florida highway system. The state expects the recent bond sale to help finance the refund of more than $205 million in bonds issued a decade ago. That refund will result in debt-service savings for the state, according to the official statement announcing the sale of the bonds.
The bonds include maturities between 2024 and 2043, with yields between 2.40% and 4.03%. The bonds received an AA rating from Fitch Ratings and S&P Global Ratings and an Aa2 rating from Moody’s Investors Service.
“The turnpike system benefits from considerable rate-making flexibility, evidenced by the legal ability to adjust toll rates above the Consumer Price Index (CPI) and the precedent of several above-inflationary toll rate increases,” according to Fitch Ratings.
The issuance comes as a population boom in Florida allows its transportation department to enact an ambitious capital improvement plan. The plan calls for almost $10 billion in spending over the next five years, more than $3 billion of which is expected to be funded through bond issuances.
Florida became the fastest growing U.S. state last year as people from the Northeast and California were attracted by warmer weather and lower taxes.
To accommodate its surging population, the FTE has committed to expand and improve many of the state’s highways. Despite a recent uptick in investment in public transportation, cars are by far the most popular mode of transportation in Florida. As such, FTE has said that tolls will cover at least 20% more than the minimum debt-service requirement associated with the bond issuance.
Morgan Stanley & Co, LLC served as lead underwriter for the bond issuance, purchasing the bonds for $190 million. The acquisition reflected a premium of $15 million.