Whitmer: State to sell $ 800 million in road bonds
Governor Whitmer announced today that the Michigan Department of Transportation (MDOT) has completed an additional $ 800 million bond issue, the second tranche of the Gretchen Whitmer government’s $ 3.5 billion program to rebuild the Michigan.
The bonds closed today will cover the cost of rebuilding some of Michigan’s busiest highways, including an ongoing $ 120 million project on I-94 in Jackson County. When all of the $ 3.5 billion bonds are sold over the next few years, they will fund or help accelerate the reconstruction or major rehabilitation of 122 major highways across the state, putting Michigan first.
“This $ 800 million bond issued as part of Michigan’s reconstruction plan will create thousands of well-paying jobs and advance our economy,” said Governor Whitmer. The Michigan Reconstruction Plan puts Michigan drivers first by strengthening our economy for communities and small businesses and helping families stay safe on the road when they commute to work, pick up their children from school and run errands. Investing in infrastructure is a priority for my administration, and I’m proud that we’re fixing the damn roads without increases at the gas pump. “
S&P Global Ratings assigned a long-term AA + rating to recent bond sales and reaffirmed its AA + rating for outstanding Michigan State Trunkline Fund bonds. An independent analysis by Moody’s Investor Services noted that despite lower fuel taxes and registration fees attributed to the pandemic, bonds enjoy strong coverage by constitutionally dedicated funds.
“The state has shown its ability to increase taxes and charges for road use in recent years, which has helped improve infrastructure financing capacity and offset stagnant trends in fuel consumption. ” Moody’s noted. “Respendable income provides sufficient debt service coverage to take into account anticipated new issues as well as fluctuations in income resulting from changing economic conditions or other trends. “
Bond sales are co-managed by financial services firm Siebert Williams Shank & Co., LLC, headquartered in Oakland. President and equity owner Suzanne Shank has managed several sales of MDOT bonds in the past.
“The governor’s plan for rebuilding Michigan is working exactly as intended, capitalizing on low interest rates to replace crumbling highways and bridges across the state,” said MDOT Director Paul C. Ajegba. “The latest bond sales and the favorable market response underscore the wisdom of bond sales.”
In a unanimous vote in January 2020, the Michigan State Transportation Commission authorized the department to issue and sell $ 3.5 billion in bonds backed by the state’s mainline revenue.
Total proceeds will be $ 1.008 billion of the $ 800 million of bonds closed today. The actual all-inclusive interest charge is 2.35%. Maximum annual debt service maintains 5.9 times coverage of income, well above the four times coverage required by state Transportation Commission policy.
In addition to the Michigan Rebuilding Bonds issued, MDOT took advantage of favorable market conditions and repaid $ 68.2 million in Trunkline Bonds. This reimbursement will result in net present value savings of $ 19.3 million, which will be fed back into the Trunkline Roads and Bridges program.