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Texas Sells $347 Mln in Transportation Bonds

By Munichain News Desk

The Texas Transportation Commission issued $346.8 million in bonds to refund previously issued securities.

The bonds mature between 2025 and 2033, yielding between 2.49% and 2.97%. They pay interest at 5%. The securities received a rating of AAA from S&P Global Ratings and Aaa from Moody’s Investors Service.

The rating reflects Texas’ “exceptionally strong economic and demographic fundamentals… that support motor vehicle use and bolster growth in the pledged revenues,” Moody’s analysts wrote.

The issuance follows the awarding of hundreds of millions of dollars in contracts for road improvements as the state rehabilitates its ailing infrastructure. The American Society of Civil Engineers (ASCE), an industry group, gave Texas’ roads and highways a “D+” rating in its most recent report card. In February, the Texas Department of Transportation provided $772 million for 79 highway improvement projects and an additional $96 million for routine maintenance projects.

That funding comes with high stakes. ASCE warned that “if left unchanged,” Texas roads and highways “will hinder the growth and competitiveness of the Texas economy.”

The commission will use the issuance proceeds to refund bonds it sold in 2014 and 2020.

The Texas Transportation Commission governs the Texas Department of Transportation, which runs state roads, rail, and other infrastructure. The bonds are special and limited obligations of the commission, payable by fuel taxes, vehicle registration fees, and other highway-related sources of income.

Ramirez & Co, Inc served as lead underwriter on the issuance, purchasing the bonds for $400.9 million. The price reflected a premium of $55.4 million and a discount of $1.3 million. Estrada Hinojosa & Company, Inc acted as financial advisor.

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