Turnpike Authority Bond Rating Raised / by Stand & Poors

By May, Bill | THE JOURNAL RECORD, September 30, 1987 | Go to article overview

Turnpike Authority Bond Rating Raised / by Stand & Poors


May, Bill, THE JOURNAL RECORD


The Oklahoma Turnpike Authority received a boost Tuesday as Standard & Poors Corp. raised the authority's bond rating to the second highest of any toll road operating agency in the nation.

The $150 million Oklahoma Turnpike System Series A Revenue Bonds were upgraded from A rating to AA-; the $36 million Series B Revenue Bonds were upgraded from BBB to A+ and the $47 million Series C Revenue Bonds were upgraded from BBB to A-.

In the Standard & Poors rating system, AAA is the highest and B the lowest, with the use of plus or minus after the rating to indicate a more specific level.

"This makes the Oklahoma Turnpike Authority's rating one of the highest of any turnpike system in the nation," said John Kilpatrick, authority chairman.

Only the Garden State Parkway authority in New Jersey has a higher rating.

The upgrading also could mean a savings of nearly $19 million on any bond issue for $300 million or more over the 40-year life of the bonds, according to Bob Cochran, senior vice president of Stifle, Nicolaus & Co. in Oklahoma City.

"This means a lot, not just to the authority, but to the whole state," Cochran said. "It comes in the middle of what is perceived as a down economic situation in the state and provides us with an economic shock which says, `Hey, look at what we can do.'

"By tomorrow (Wednesday) morning, the news will be all over the financial community and will make bond buyers look more favorably on all issues from Oklahoma, not just those from the turnpike authority."

Standard & Poors upgraded the rating because the authority has committed a strong revenue base to reducing debt service, Kilpatrick said.

That statement was echoed by Cochran, who said the upgrading was a result of the operational philosophy of both the authority's board and management personnel.

"Management there is serious about keeping expenses down and operating on a professional level," Cochran said. "This dramatic upgrading of the bond rating reflects the strong history they have of operating positively.

"When they (Standard & Poors) starting studying the authority's bonds, we went back to (records dating to) 1970 to support our position that the bonds were undervalued.

"Now, this (new rating) says that for the past 17 years, the authority has exhibited a positive record of management both on the board and operating level."

In addition to the Standard & Poors action, Cochran said Moody's Investors Service also is studying the authority's bond repayment history to determine if it can make a similar rating upgrade.

The bonds were upgraded, Kilpatrick said, after Cochran talked with Standard & Poors officials in Oklahoma City to review bond programs of other agencies.

"We just felt their bonds were undervalued," Cochran said, "We asked them (S&P officials) to stop by and talk to the authority about it.

"This upgrading proves that we were right."

The bond rating is basically "a credit rating of the agency, an indicator to the bond market as the quality of the debt and the likelihood as to whether it will be paid when due," he said. …

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