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Another $91 million of W.Va. road bonds ready to go to market

July 21, 2018

Another $91 million of bonds are ready to go to market, part of West Virginia’s “Roads to Prosperity” highways construction initiative, after state officials approved the bond sale resolution Monday.

That follows the sale of $220 million of GARVEE bonds in September, and the sale of nearly $800 million of highways general obligation bonds in May. In August, the state Parkways Authority is set to market the first $172 million of Turnpike bonds as part of the initiative.

The round of GARVEE bonds approved Monday — which are financed through Federal Highways Administration annual payments to the state – will fund 36 projects around West Virginia, including 18 bridge replacements or repairs.

“We’re very excited with the projects we do with GARVEEs,” Transportation Secretary Tom Smith told members of the state Transportation Advisory Board. “These are really good, solid projects.”

Board members were advised Monday that the new round of GARVEE bonds will likely have a slightly higher interest rate than the bonds sold in the fall for a number of factors.

Those 15-year bonds sold in September had a 2.96 percent interest rate.

Christine Fay, senior managing director of Public Resources Advisory Group, said those factors include investors’ concerns that a possible trade war with China will slow U.S. economic growth, as well as the fact that about $75 million of road bonds from the $800 million bond issue currently remain unsold.

Otherwise, she said ratings for the GARVEE bonds remain strong, at A2 from Moody’s and AA from Standard and Poor, since the bonds are guaranteed with Federal Highways Administration payments to the state, amounting to about $442 million each year.

She said the new bond issue will have a debt service of about $7.6 million a year, on top of the $24.6 million a year debt service for the bonds sold in September. That $32.2 million a year amounts to just over 7 percent of annual Federal Highways Administration funding to the state.

Fay said this will be a fairly busy week for bond sales, with $9.2 billion of bonds set to go to market. That includes the “marquee” bond sale of the week, $1.2 billion of New Jersey Transportation Trust Fund bonds.

However, she said West Virginia will have the advantage of going to market ahead of the New Jersey bonds, and with a stronger bond rating than the New Jersey bonds, which are rated A-and AA-by the two rating agencies.

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