Three Wall Street ratings agencies have released favorable ratings for approximately $1.2 billion in Alameda Corridor Transportation Authority (ACTA) bonds, demonstrating confidence in the rail cargo expressway project.
Fitch, Moody's and Standard and Poor's have all given the ACTA bonds favorable ratings, clearing the way for a bond sale later this month. The ratings determine at what level interest rates will be set.
"These ratings offer more evidence that we have a viable project with a strong revenue stream and the ability to pay our debts on time," said Los Angeles City Councilman Rudy Svorinich, Jr., chairman of the ACTA Governing Board. "The ratings should lead to a very successful bond sale." ACTA Chief Executive Officer Jim Hankla said, "We are pleased that these agencies have rated our bonds well above investment grade levels."
ACTA, a joint-powers authority between the cities and ports of Long Beach and Los Angeles, is building a 20-mile railroad freight expressway linking the ports to the transcontinental rail yards just east of downtown Los Angeles. The project will speed the shipment of cargo and improve the flow of rail and vehicle traffic by consolidating rail lines and eliminating more than 200 street-level railroad crossings.
The bonds, scheduled for sale in the weeks of Jan. 18 and Jan. 25, are the centerpiece of the funding package for the $2.4 billion Alameda Corridor project. Funding sources include:
$1.165 billion in bond proceeds.
$400 million loan from the U.S. Department of Transportation.
$394 million in grants from the ports.
$347 million administered by the Los Angeles County Metropolitan Transportation Authority.
$154 million in other state and federal sources and interest income.
Bond debt will be retired with revenues from fees paid by railroads for use of the Alameda Corridor. All debt is to be paid off within 35 years of the scheduled date of project completion in early 2002. Independent consultants have projected steady growth in cargo container traffic at the ports, resulting in a revenue stream more than sufficient to pay off the debt.
For $1 billion in senior bonds, Fitch offered an A rating; Moody's an A2 rating (the equivalent of Fitch's A rating); and Standard and Poor's a BBB+ rating. For $165 million in subordinate bonds, ratings were slightly lower.