Transurban closes on senior debt at 4.97% for DC Capital Beltway HOT Lanes
By Peter Samuel
Transurban, the major investors in the toll concession on the $1.4b project to widen the Capital Beltway (I-495) in Virginia to 12 lanes have gone to financial close June 12 on $589m of Private Activity Bonds. The 40-year tax exempt bonds are costing Transurban a weighted average interest of 4.97%, an improvement on the 5.35% when the initial steps in the financial close were reported in December.
Four banks were involved in the issue in New York: DEPFA, National Australia, Espirito Santo, and Nova Scotia.
Chris Lynch, CEO of Transurban Group said: "The close of the senior debt financing in this difficult credit environment is a reflection of the Capital Beltway Project's strong investment fundamentals. The PABs issuance was more than three times oversubscribed in one of the toughest debt markets in
Transurban says it thinks it is is the first company to issue PABs to fund a surface transportation project in the United States, and also the first company to combine PABs and TIFIA funding within one financing.
The Beltway project has got funding via USDOT-supported TIFIA loans at 4.45% for 40 years.
The weighted average cost of both PABs and TIFIA loans for the project is 4.71%, Transurban says.
The project will add four HOT Lanes to the existing 8 lanes of the Beltway between the Springfield interchange with I-95 to north of Tysons Corner, do major rebuilds of the free lanes, and add new direct connector ramps to access/egress points along the interstate.
The project will be financed with tolls on vehicles with fewer than three occupants. Tolls will be set dynamically to maintain free flow conditions at all times.
Transurban, the leading toll operator in Australia also operates the Pocahontas Parkway tollroad in Richmond VA and is moving toward a close on reversible HOT lanes on I-95/395 between Fredericksburg VA and the Pentagon. Engineering and construction on both the Beltway and I-95/395 projects is by Fluor which is a minor equity holder.