The Toll Road Authority of Harris County, Texas, issued $119.5 million in bonds to refund a previous issuance.
The bonds mature between 2024 and 2035, with yields between 2.84% and 3.17%. The securities received a rating of AA from Fitch Ratings and Aa2 from Moody’s Investors Service.
The rating reflects the county’s “essential road network in a large and economically solid region with limited viable alternatives, which also drives strong traffic volume. The rating also reflects the authority’s prudent financial management and history of strong and growing traffic and revenue performance,” according to Fitch.
The issuance comes amid rapid growth in Harris County, which includes Houston and the surrounding metropolitan area. The county is the most populous in Texas.
While the county boasts an extensive highway network, worsening rush hour traffic drove voters to endorse a system of toll roads in 1983. Since then, the county has purchased several bridges and highways from the states and implemented tolls, which urban planners say have decreased rush hour congestion. Those tolls have also helped the county to raise money.
The bonds will be backed by revenue from those toll roads, which generated more than $800 million in revenue in fiscal year 2022. Over half of that revenue is generated by the Sam Houston Tollway (also known as the Texas 8 Beltway), a highway that forms a circle around the city of Houston. The securities will not constitute an indebtedness on Harris County or the state of Texas.
Hilltop Securities Inc served as lead underwriter on the issuance, purchasing the bonds for more than $134 million. The price reflected a premium of $15.5 million.