How badly is the Wall Street implosion affecting cities and states — and, say, toll road authorities? Pretty badly, if they are trying to borrow money right now.
That’s the word from Ken Orski, editor and publisher of Innovation Briefs a must-read transportation newsletter that often touts the benefits of private investment in infrastructure but does so with fairness and rigor.
On Thursday, he wrote to recap a meeting of transportation officials in New York that included remarks by top bankers.
A sober assessment of the present state of the financial markets was offered by a senior Wall Street executive highly knowledgeable in transportation financing. The full spectrum of debt-funded infrastructure funding alternatives is under pressure, he reported. Most states are in a massive budget review as the impact of reduced revenues is beginning to emerge. Credit spreads have widened significantly and the overall borrowing costs, including Private Activity Bonds, have increased appreciably. There has been a record postponement of new bond issuances and a cancellation of at least one proposed PPP deal.
The debt market is already affecting Texas transportation agencies.
NTTA is looking to convert the final piece of the short-term debt it acquired to buy the State Highway 121 contract in the next month or so — and so far the prospects for doing so cheaply are dim. TxDOT, which has some $500 million in variable-rate financing, has seen its rates go through the roof.
But what is most interesting about Orski’s comments is his report that private firms, too, are feeling the pinch.
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