North Texas Tollway Authority, Series 2011B

North Texas Tollway Authority
System First Tier Revenue Refunding Bonds
Series 2011B

The Series 2011B Bonds were issued in November as a refunding and secured by a first-tier lien on and pledge of the tolls and other revenues of the NTTA system which includes 3 toll roads, 2 bridges and 1 tunnel. In addition, the First-Tier Bonds were secured by a fully cash-funded debt service reserve fund equal to the average aggregate annual debt service.

As senior manager, Siebert Brandford Shank provided weekly refunding savings monitors and analyses and evaluated the potential advance refunding savings available from bonds callable in 2013, while taking into account current historically low interest rates and the steep yield curve, which was producing significant negative arbitrage.

Marketing the Bonds presented a particular challenge as they were scheduled to price only two weeks following a $640 million NTTA bond issuance. Other challenges included the disclosure of an FBI conflict of interest investigation, the resignation of NTTA’s Executive Director and NTTA’s issuance of $6 billion in new debt since 2007 for new roads. NTTA addressed these challenges through strong financial management which resulted in an upgrade of Moody’s outlook on the Bonds.

Our firm developed a comprehensive marketing plan focused on attracting new investors with a demonstrated interest in similar credits and addressing investor questions about recent events at NTTA. The week prior to pricing, we arranged five one-on-one calls between NTTA and targeted investors and developed and posted a Netroadshow investor presentation.

The heaviest municipal supply of the year—over $12 billion of municipal issuance—occurred the week of pricing. However, following a strong pre-marketing effort, investors placed over $685 million in orders during the order period from over 60 different institutional accounts, over a dozen of which were new to the credit. Due to strong investor demand, we repriced oversubscribed maturities and less than 2% of investor orders were dropped despite the fact that spreads had tightened considerably. The Bonds priced at spreads between 109 to 138 basis points over MMD, 7 basis points tighter than the syndicate consensus scale and 41 basis points tighter than a comparable 2038 maturity in a similar refunding a year earlier. The current refunding generated $7.4 million of present value savings (7.8% of refunded par).