Transportation reform legislation signed by Governor Deval Patrick is making an immediate, positive difference in saving transportation costs while improving the Turnpike Authority credit rating.
Transportation Secretary James Aloisi and Turnpike Executive Director Jeff Mullan worked with Governor Patrick's Executive Office of Administration and Finance in using the tools provided by the Governor and legislature in the transportation reform law. The result is the announcement of increased credit rating for Turnpike bonds, avoiding a $186 million payment to UBS on interest rate swap agreements. Read the Executive Office of Administration and Finance statement below summarizing this important step forward.
Governor Deval Patrick announced today the Commonwealth will save nearly $200 million this week in transportation-related costs as a direct result of sweeping transportation reform he signed into law less than one month ago.
The Patrick-Murray Administration was notified today that the rating agency Moody's has increased the credit rating of the Turnpike Authority's MHS subordinate bonds multiple levels to A1 stable. As a result, UBS will not have the right to terminate four interest rate swap agreements with the Turnpike, and the Turnpike will not be required to make a $186 million payment to UBS. The Administration expects to hear from rating agency Fitch this evening.
The rating upgrade is a result of the sweeping transportation reform legislation recently signed by the Governor, including the Commonwealth's commitment to provide $100 million each year to the Turnpike Authority. The Governor also worked closely with the Legislature over the last few weeks to enact additional legislation to increase the credit of the Turnpike's bonds. Transportation reform and this resulting rating upgrade not only relieves tollpayers from having to make a $186 million payment to UBS, they will also save tollpayers millions of dollars in operating costs and financing costs in the years to come.
A fifth swap agreement with UBS, presently valued at $65 million, is not cured by the Moody's upgrade. The Administration is awaiting rating action by Standard and Poors, expected tomorrow, which could potentially cure the fifth swap. At the same time, the Administration continues to negotiate with UBS about the terms of a potential Commonwealth guaranty, which the Legislature authorized last week and the Governor signed Monday.