As traffic lags, Texas 130 tollway debt rating lowered again (Austin-San Antonio corridor)

[TexasTowelie]

Moody’s Investors Service, saying that traffic remains well below forecast levels on the privately operated section of Texas 130 and that reserve funds are quickly depleting, has once again lowered the rating for the $1.18 billion of debt owed by the road’s operators.

The rating agency also issued a “negative outlook” for the tollway project, saying that its lighter-than-expected traffic will “grow at a slow to moderate, yet inadequate pace” to meet current and future debt payments.

The road, running from Mustang Ridge to Seguin, could fall into default next year, the rating agency wrote in the Oct. 15 report that lowered the road project’s debt rating to Caa3, below investment grade, potentially leading to a Texas Department of Transportation takeover of the 40 miles of toll road. TxDOT in 2007 granted a 50-year lease to SH 130 Concession Co., a consortium of Spanish toll road builder Cintra and San Antonio-based Zachry Construction Co., under which the company built the road at its own expense and keeps, at this point, about 95 percent of the toll revenue.

TxDOT would have to pay to acquire the 85 mph road under the “buyback” terms of the contract, but it was not clear Monday what those terms are or how much TxDOT might have to pay for the $1.4 billion road. The privately operated section of Texas 130, which connects to a northern 49-mile TxDOT segment that came on line in pieces between 2006 and 2008, opened a year ago to nationwide publicity because of its 85 mph speed limit.

Absent an infusion of cash from the concession company’s owners or a restructuring of the debt, the highway “will have insufficient cash to meet its debt service payments due in June 2014,” Moody’s said. The newest rating — Moody’s in April had lowered Texas 130’s original rating to B1 — falls into the lower half of what the rating agency calls “speculative grade,” or well below investment grade.

The concession company released a short statement pointing to a yearlong program that began in April, subsidized by TxDOT, to lower truck tolls on the highway to the same rate paid by passenger vehicles.

“We remain confident that the recently opened SH 130 … will benefit our investors and the people of Texas,” spokesman Chris Lippincott said in the statement.

Neither Moody’s, the concession company nor TxDOT Monday would release recent traffic or revenue numbers from the road. TxDOT in April, in response to open records requests from the American-Statesman and other media outlets — and a Texas attorney general’s opinion that the records were legally public information — had released the numbers for November and December 2012.

Despite that opinion, TxDOT Monday was considering seeking another attorney general’s opinion on the latest information request, spokeswoman Veronica Beyer said.

But the Moody’s report, combined with the earlier numbers that were made public, gives a qualitative picture painted in dark hues.

In its first two months, the road was averaging about 3,000 vehicles a day and taking in about $51,000 a day. On an annualized basis, that would have been about $18.6 million a year. Moody’s said then that was less than half of the traffic and revenue originally projected by the concession company.

Moody’s in its recent report said current revenue already has been inadequate to make the project’s twice-a-year debt payments and that the company, owned 65 percent by Cintra and 35 percent by Zachry, has had to dip more deeply than expected into $65 million in reserve funds.

And the picture will grow worse before long, according to Moody’s. Right now, the company must make debt payments only on $686 million in debt owed to private bond investors. But in 2017, payments on $493 million in federal transportation loans will begin, the report said, leading to annual debt service of $78 million.

“The current debt service profile is too burdensome for the project in its current ramp-up phase and provides little breathing room,” the report said, “especially given that traffic has not materialized as expected.”

More at http://www.mystatesman.com/news/news/transportation/as-traffic-lags-texas-130-tollway-debt-rating-lowe/nbTdg/?icmp=statesman_internallink_textlink_apr2013_statesmanstubtomystatesman_launch .

[font color=green]So will the taxpayers of Texas have to bail out Rick Perry's friends at Cintra?[/font]

[kentauros]

1. They should turn it into a fracking equipment road.

Charge a thousand dollars per piece of equipment, and they'd make all their money in a week!

[tularetom]

2. You didn't have to be Nostradamus to see that this was going to happen

So I think the state of Texas and the bond rating agencies have a lot of splainin to do.

[Eleanors38]

3. Perry's RW blowholes surround Austin ("Moscow-on-the-Colorado") with toll roads

(few in the rest of the state) and let a foreign country run it with loan-shark penalties for paying late, and expect big bucks to be extracted by these trolls? I'm amazed there has been little discussion as to why so few use these money drainers.

I for one refuse to use them, and plan my trips in & out of town on a duck hunter's schedule: So early you can hear the pork belly futures on AM radio.

[GTurck]

4. We used it once...

a few years ago to pick up friends at Austin Bergstrom but the tolls were awfully high. We have not used it since. We felt we were being gouged. It was only after that that we found out it was a private toll road which I guess Texas now controls. We refuse to spend our hard earned pension and Social Security on a private foreign enterprise that is only looking at profits. Our state and federal government built I-35 and other roads with our tax money that do the job and we pay nothing more for the privilege.

[Javaman]

5. and the amusingly stupid part about all this is...

cement head perry wants to build yet another toll roll from Downtown Austin to the Airport.

[hobbit709]

6. I refuse to use it and any other toll roads in Austin.

If I'm on 183 I get off at Last Free Exit and do the same on MoPac.