Featured Municipal Bond Issue, Week of 07/31/2017: Bay Area Toll Authority Revenue Bonds (Intermediate Lien) – $1.1 Billion


This week’s featured bond comes from the State of California. The Bay Area Toll Authority is issuing senior and subordinate toll bridge revenue bonds in the amount of $1.1 billion the week of July 31, 2017. These Bay Area Toll Authority revenue bonds consist of five separate series.

Four series are Toll Bridge Senior Revenue Bonds. Series 2017E ($250 million), Series 2017G ($175 million), and Series 2017H ($175 million) are term rate revenue bonds, and will accrue interest at a term rate to be determined. Series 2017I (issued amount to be determined) is a series of index rate revenue bonds. Interest on these bonds will be accrued at an initial index rate, and then calculated at a rate equal to the sum of the index rate index then in affect and the applicable spread. Series 2017S-7 ($550 million) are Toll Bridge Subordinate Revenue Bonds, accruing interest at per annum rates.

Proceeds from the Senior Bonds will be used to refund all of the Bay Area Toll Authority’s outstanding San Francisco Bay Area Toll Bridge Revenue Bonds Series 2014B. The Subordinate Bonds’ proceedswill be used to refund all or a portion of the Authority’s outstanding 2010 Series S-2 Bonds and 2013 Series S-4 Bonds.

Security for the bonds includes a statutory lien on all Bridge Toll Revenues in favor of the holders of the Authority’s toll bridge revenue bonds, and any providers of credit enhancement for those bonds. Bridge Toll Revenues include all tolls and all other income, including penalties for violations derived from the Bridge System, not limited or restricted to a specific purpose. This revenue pledge applies to all five series, with the exception that the Series 2017S-7 operates under a subordinate pledge of revenue, which includes all revenues pledged other than the amounts held in the reserve funds for senior bonds, other proceeds of senior bonds, and interest subsidy payments received from the federal government on account of the issuance of senior bonds as Build America Bonds.

Further details on the purposes, interest accrual, tax-status, and security, as well as other matters pertaining to these Bay Area Toll Authority revenue bonds can be found in the preliminary official statement, provided by MuniOS.

The Bay Area Toll Authority primarily serves the San Francisco-Oakland-Hayward, CA Metropolitan Statistical Area. As of May 2017, the San Francisco-Oakland metro area has an unemployment rate of 3.0%, which is 1.4% lower than the national rate for May, and 1.0% lower than at the same time in 2016. The chart below shows the changes in the San Francisco MSA, State of California, and U.S. unemployment rates for the past ten years. MuniNet provides this data and more, easily accessible, for all 50 states and each Metropolitan Statistical Area in the country, in our Employment Database.

Bay Area Toll Authority

Provided at left is a quick snapshot of financial characteristics of the Bay Area Toll Authority, compared with the medians for toll authorities, as of 6/30/2016, courtesy of Merritt Research Services, LLC. Merritt has many of the sector medians publicly available and regularly updated on their Benchmark Central page. (Merritt believes the data to be reliable but does not make any representations as to its accuracy or completeness)In addition to the Merritt information related to the featured bond, more information can be found on our municipal bond calendar, city, state, and county pages, and our employment database.

These facts and numbers are for informational purposes, and should not be considered an official disclosure for potential investors. Investors should consult the official statement. None of the information provided should be construed as a recommendation by MuniNet Guide, MuniNet LLC, Merritt Research Services LLC, or any of their employees. Information and analysis is for informational purposes only.

by Jeffrey L Garceau