We’re likely to get a clearer picture of how badly the credit market woes have impacted NTTA on Monday. The tollway authority has called a special meeting of its board of directors amid expectations that it will not be able to meet a deadline to refinance the part of the debt it incurred last year when it paid $3.2 billion for the State Highway 121 toll contract.
Unfortunately for those of us who will be attending, the meeting is at 8 a.m., and at its Plano headquarters.
When NTTA won the right to build and operate State Highway 121, its win over Cintra came with a tight deadline — and a big upfront payment. To make the payment on time, the agency took out some $3.5 billion in what are called Bond Anticipation Notes.
But the notes comes with an expiration date — November 19, 2008 — and have to be converted into other, long-term debt before them.
Over the past year, NTTA has been doing so in phases, most notably last February, when it refinanced some $5 billion in revenue bonds, and converted a bunch of the BANs. But since then, the credit market has only gotten worse and the deadline has loomed like a bad headache for the agency.
It still has $225 million in unconverted BANs, and Monday’s meeting is a sure sign that the agency does not expect to be able to convert the notes by the Nov. 19 deadline. Spokeswoman Sherita Coffelt said Friday that the credit market remains perilous for public agencies seeking to sell long-term municipal bonds.
“We’re looking to mitigate missing the (BAN’s) maturation deadline,” she said. “We’re going to find interim financing to refinance our interim financing.”
The idea is that the agency will be better off floating another short-term loan — even a bank loan — for the $225 million, giving it time to return to the bond market when the credit crisis has eased. The impact in the short-term, however, will likely be higher interest expenses.
Stay tuned, and we’ll have more after the Monday meeting.
(The agency’s press release is pasted after the jump.)
… [visit site to read more]