The Texas Department of Transportation has achieved the greatest savings on a single bond deal in the state’s history through a $1.68 billion refinancing.
The bond issue refinanced nearly all the outstanding debt for the Central Texas Turnpike System (CTTS), first issued in 2002. The savings amounted to $380 million in terms of present value or more than 21 percent of the amount of debt refinanced. On a gross basis, the savings total will be $948 million with savings beginning in fiscal year 2026.
The department benefitted from historically low interest rates as the overall borrowing cost was 4.09 percent for debt with an average life of 21.4 years. With the refinancing, TxDOT paid off a $900 million Transportation Infrastructure Finance and Innovation Act (TIFIA) loan for CTTS – the largest TIFIA loan repaid to date. There was considerable investor interest in the bond issue with more than 90 different institutional investors submitting more than $5 billion worth of orders.
Benjamin Asher, the innovative financing/debt management officer for TxDOT, led the refinancing effort for the department working with co-senior managing underwriters Barclays and J.P. Morgan. Since 2012, TxDOT has completed five such bond refinancings for a total gross savings of $1.59 billion.