Alameda Corridor Bond Sale Starts This Week; Debt Receives High Ratings
JANUARY 18, 1999
LOS ANGELES COUNTY – Alameda Corridor Transportation Authority (ACTA) bonds, the financial centerpiece of the rail cargo expressway project, go on sale Tuesday with newly-upgraded ratings.
ACTA, the public agency building the project, will put $645 million in tax-exempt bonds on the market this week. Another $514 million in taxable bonds go on sale starting Monday, Jan. 25.
Three Wall Street ratings agencies previously rated the bonds favorably, well above investment-grade. After ACTA purchased bond insurance based on those ratings, the agencies upgraded their ratings, which determine interest-rate levels. The current ratings are Aaa by Moody’s and AAA by both Fitch and Standard & Poor’s.
“Our staff briefed potential buyers across the country last week and came back reporting an extraordinarily high level of interest in our bonds,” said Los Angeles Councilman Rudy Svorinich, Jr., chairman of the ACTA Governing Board. “We anticipate a very successful sale.”
The bonds are the centerpiece of the $2.4 billion funding package. 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.
Bond proceeds are scheduled to be delivered on Feb. 9.
Because of its unique public-private structure, the funding package was named “Infrastructure Deal of the Year” by Project Finance magazine, an international publication based in London.
The ratings apply to $1 billion in senior bonds. For a much smaller subordinate bond offering, the ratings are slightly lower but still above investment-grade.
ACTA is a joint-powers authority between the cities and ports of Long Beach and Los Angeles. The Alameda Corridor is 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.