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CHARLESTON, WV – On Wednesday, June 9, the West Virginia Parkways Authority priced its second tranche of Toll Revenue Bonds under Gov. Jim Justice’s Roads To Prosperity program, and its $333 million bond offering saw an overwhelming $3.8 billion in investor orders. The investor demand for the bonds was 11.6-times the bond offering, which allowed the Parkways Authority to drive down the interest rate on the bonds and secure a 2.62% all-in cost of borrowing on its 30-year bonds. The demand for the bonds was able to produce a $90 million premium on the issuance for a total bond sale of $423 million.
Many toll roads around the country have experienced significant disruption to traffic volumes and revenues given the stay-at-home orders implemented following the onset of the COVID-19 pandemic. While traffic on the West Virginia Turnpike was originally impacted in March and April 2020, the Turnpike’s resilient demand profile bounced back with traffic levels returning to pre-pandemic levels in the fall of 2020. Investors were eager to buy the Turnpike’s bonds, given the strong credit quality of the Parkways’ bonds and the Turnpike’s strong performance during the pandemic. As an infrequent issuer, the Parkways Authority benefited from its scarcity value and attracted a large and diverse group of investors. At the time of sale, $3.8 billion of orders were submitted from nearly 90 unique investors. Market conditions amplified the bond sale’s success with a rally in the Treasury market and an exceptionally strong day in the municipal market with all investors anxious to put their money to work.
The Parkways Authority toll revenue bonds are highly rated by both S&P Global Rating and Fitch Ratings with both agencies assigning AA- ratings on the bonds. In their assessments, both rating agencies highlighted the Turnpike’s role as a key interstate corridor, the Parkway Authority’s very strong management and governance, and the prudent financial and capital planning practices implemented by the Parkways Authority over the past several years.
In 2019, the Parkways Authority doubled tolls on the Turnpike at the same time it established the Single Fee discount program, which allows passengers with a West Virginia E-ZPass unlimited use of the West Virginia Turnpike for a single annual fixed fee. The increased toll rates have generated revenues that have not only allowed for needed investment and improvement on the Turnpike, but also allowed for the funding of nearly $600 million in investment in the 10-county area surrounding the Turnpike.
Jeff Miller, Executive Director of the West Virginia Parkways Authority said “I am thrilled with the response from Wall Street for our bonds. This is a testament to the incredible vision that Governor Justice has had to utilize one of the most important assets that our state’s road system has: the West Virginia Turnpike. Annually, over 75% of toll revenue is collected from out-of-state and commercial traffic and we offer an annual $25 single fee discount program for West Virginia E-ZPass unlimited passenger car use. The toll revenue bond proceeds will go off the Turnpike to fund West Virginia Division of Highways projects in the 10 counties surrounding the Turnpike. We are so pleased to be able to partner with the WVDOH to provide them the funding for important projects in those counties.”
Leading up to pricing, the Authority worked closely with Public Resources Advisory Group Inc., serving as municipal advisor; Bowles Rice, serving as Bond Counsel; Spilman Thomas & Battle, serving as Disclosure Counsel; CDM Smith, serving as the Traffic and Revenue Consultant; and Wells Fargo, serving as the senior managing underwriter on the bonds.