FHWA Resource Center
INNOVATIVE FINANCE TEAM
May 25, 2000/FHWA Resource Center
Data on selected Garvee bond issuances for Briefing on Atlantic Steel Project:
New Mexico
Bond Amount: $295 million
Term: 18 year term
Security: Stand-alone (backed by future Federal-aid funds only)
Insurance: Insured
Interest Rate: 4.7%
Rating: A3 (Moody's)
Issuance Date: 1/99
Comments: NM 44 project to be completed in 3.5 rather than 27 years
New Jersey
Bond Amount: $151 million
Term: 10 year term
Security: Backed by Federal Transit Admin Section 5307 formula funds only
Insurance: Insured
Interest Rate: 3.5% for 2001 maturity to 4.3% for 2008 maturity
Rating: A (Standard & Poor's); AAA (Standard & Poor's with insurance)
Issuance Date: 3/99
Comments: Garvee backed by pledge of FTA (transit) funds;
Structured as Certificates of Participation (COPs), where holder of certificates
own right to participate in periodic lease payments
Mississippi
Bond Amount: $200 million
Term: 10 year term
Security: Backed by Federal-aid reimbursements and state gasoline tax
Insurance: Uninsured
Interest Rate: 4.85%
Rating: Aa1 (Moody's)
Issuance Date: 6/99
Comments: Statewide four-lane construction program significantly accelerated;
Not a traditional Garvee, since bond is backed by Federal-aid reimbursements
rather than future Federal-aid funds
Arkansas
Bond Amount: $575 million bond program; first installment $175 million
Term: 14 years
Security: Backed by future Federal-aid funds, state diesel tax, and pledge of full faith and
credit of state
Insurance: Uninsured
Interest Rate: 5.21%
Rating: Aa2 (Moody's); AA (Standard & Poor's)
Issuance Date: 3/00
Comments: Interstate reconstruction program to be completed in 5 rather than 12 years
Colorado
Bond Amount: $1.7 billion bond program; first installment $526 million
Term: 1 to 15 years
Security: Backed by future Federal-aid funds and state revenues (gas tax, sales tax,
legislative appropriations) at discretion of CDOT
Insurance: Uninsured short-term and insured long-term
Interest Rate: 4.61% for uninsured 2001 maturity to 5.81% for insured 2015 maturity
Rating: Aa3 (Moody's); AA (S&P); AA (Fitch) for uninsured; AAA (S&P) for insured
Issuance Date: 5/17/00
Comments: Debt service is limited to half the prior year's Federal-aid funds received
Please Note: Other states with specific plans to issue Garvees or awaiting legislative approval to
issue Garvees include Alabama, Alaska, Arizona, Florida and Virginia. Comparative data
regarding these states' issuances may be available within the next 6 months.
For additional information, please feel free to call Frederick Werner at 404-562-3680.
S lected strategies for increasing the Garvee bond rating and/or reducing the interest rate:
1) Structure Garvee debt over shorter maturities
2) Consider buying bond insurance
3) Use conservative leveraging strategy (limiting debt service to reasonable proportion of
Federal-aid funds)
4) Provide secondary state pledges or back-ups (gas/diesel tax, sales tax, tolls, property taxes,
pledge of state's full faith and credit)
5) Budget for solid cash flow in repayment years
6) Maintain clear communication with rating agencies
7) Set up a debt service reserve
8) Establish covenants to assure third party (such as state treasurer) as trustee
TRAINING
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