The New York State Thruway Authority issued $1.02 billion in bonds to finance capital improvements and refund previously issued securities.
The bonds mature between 2025 and 2054, yielding between 2.59% and 4.07%. They received a rating of A+ from S&P Global Ratings and A1 from Moody’s Investors Service, which revised the authority’s outlook to positive from stable.
The revision was driven by a recently implemented hike in tolls on state roads that is expected to increase revenue by 6% annually, Moody’s analysts wrote, noting the importance of steady revenue growth to maintaining financial metrics. “The multi-year toll increases enhance the authority’s credit profile versus previous years when increases were not implemented in time to keep financial metrics higher,” they wrote.
The bond proceeds will fund the authority’s capital investment plan, which calls for $2.4 billion in spending through 2028. About half of the plan will be financed by debt.
Most of the plan’s improvements call for standard maintenance. In 2018, the authority completed construction on the Mario M. Cuomo bridge, then the largest bridge project in New York History. The bridge, which connects Westchester and Rockland Counties, cost $3.7 billion to construct.
Those costs could significantly increase as a result of legal action. The authority is currently involved in a dispute with the bridge’s constructor, Tappan Zee Constructors LLC. The company has submitted requests for almost $1 billion in additional payment, plus interest, that it says it is owed by the authority for issues of time, extra work, and oversight of the project, according to the official statement accompanying the sale of the bonds. The authority disputes these claims.
The New York State Thruway Authority manages 570 miles of tolled highways, including portions of Interstate 87, Interstate 90, and Interstate 287. The bonds are direct and general obligations of the authority, payable by its revenue.
J.P. Morgan Securities LLC served as lead underwriter on the issuance, purchasing the bonds for $1.14 billion. Public Resources Advisory Group and Acacia Financial Group, Inc acted as financial advisors.