Moody's downgrades Texas 130 toll road company, TXDoT loan

[TexasTowelie]

Moody's Investor Service has downgraded the credit rating of the private company that built and operates the Texas 130 toll road extension, a rating that could continue to drop unless traffic “aggressively” grows on the road in the next two years.

Moody's issued the rating April 12 after putting the SH 130 Concession Co., a partnership between Spanish-based Cintra and San Antonio's Zachry American Infrastructure, on review in March.

The toll road, from Seguin north to South Austin, was billed as the nation's fastest when it opened to drivers in late October, boasting an 85-mph speed limit.

But traffic counts on the road are about half the initial projections, the Moody's report said, forcing the company to dip into its financial reserves to make loan payments and raising concerns about the possibility of future default.

More at http://www.mysanantonio.com/news/local_news/article/Moody-s-downgrades-toll-road-company-4559116.php .

[font color=green]The article states that the company faces a negative outlook after the four step drop in its credit rating on a $686 million secured bank loan. In addition, a $430 million loan from TXDoT was dropped three steps. Both loans are lowered to B1 status which is considered to be junk bond status.[/font]

[kentauros]

1. Maybe that's the method for getting our toll roads

back in the government's hands. Not that I want us to have any toll roads, but at least stop making privately-owned versions.

[TexasTowelie]

2. Yes, but at a tremendous cost to taxpayers who would have to pay the bonds.

Privatize the profits, subsidize the losses.

In addition, it looks like TXDoT is ready to go all in on the public-private financing scheme:

In its first meeting after a legislative session in which requests for transportation funding fell billions of dollars short of requests, the Texas Transportation Commission voted Thursday to open the door to allowing private firms to take on a larger role in some road projects.

“We’re trying to stretch our resources as far as possible,” TxDOT Executive Director Phil Wilson said.

The five commissioners voted unanimously to consider amending the agency’s rules to allow for a new kind of public-private partnership for the agency in which TxDOT would share financial risk with private entities on a project and even agree to reimburse them from the state highway fund if needed to ensure they make a profit. TxDOT will accept public comments on the rule change until July 15. Afterward, the commission will consider adopting the proposal.

Currently, toll projects in Texas range from privately developed ones like State Highway 130 south of Austin, where a private entity takes on all the financial risk, to the DFW Connector Project in North Texas, where public entities are on the hook. Wilson described this latest proposal as allowing for projects that fall in between those two extremes.

“This would be more of a blended model,” Wilson said.

http://eyeonwilliamson.org/?p=12900

[Downwinder]

3. But, Texas is great for business.

[tularetom]

4. Not to worry, in the end the hated gubmint will bail them out

It ain't hard to see where this will wind up. The operators will whine that they can't make any money on this clusterfuck of a road. The state will buy the facility back and pay off the shortfall with taxpayer dollars. The private investors won't lose a dime and the motoring public will get screwed again.

And afterwards the voters of Texas will continue to vote for politicians who get elected by bad mouthing the gubmint.

[hobbit709]

5. My heart bleeds for them-NOT!

It was a bad idea to start with.

Like their ads where they want you to use it to beat the traffic.
In my case I would have to drive 10 miles east to get to it, then drive 10 miles west to get back to Austin, plus pay for the privilege.
So I would have to burn an extra 20 miles of gas and pay for the privilege to save maybe 10 minutes of time.