Florida bridge agency misses bond payment, defaults

Reuters News
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Posted: Jul 01, 2011 3:09 PM
Florida bridge agency misses bond payment, defaults

By Michael Connor

MIAMI (Reuters) - A public authority in Florida's Panhandle missed a $5 million bond payment due on Friday and is now in default on $116 million worth of bonds sold to build a toll bridge that has drawn little traffic in a dozen years,

Moody's Investors Service downgraded the outstanding revenue bonds of the Santa Rosa Bay Bridge Authority to Ca from Caa3, according to a news release from the Wall Street credit-ratings group.

Ca is Moody's second-lowest muni bond rating and is given to borrowers with extremely weak credit standings, in comparison with other issuers of tax-free debt. Downgrades raise borrowing costs for issuers and hurt prices of outstanding bonds.

Another credit group, Fitch Ratings, on Friday also cut its underlying rating on outstanding Santa Rosa revenue bonds to a D from a C, the level reserved for a bankruptcy filing, payment default or coercive debt exchange. Fitch said.

The trustee for the Santa Rosa bonds, Bank of New York Mellon, sent an advisory to bondholders saying the authority would be unable to make its Friday payment, a bank spokesman said.

The 3.5-mile Garcon Bridge across Pensacola Bay in northwest Florida opened in 1999 and has had chronically low use and toll collections since then. Forecasts of toll revenues for the first five years were off the mark by 90 percent.

Traffic in May was down 1.9 percent from a year earlier, in part because other nearby roads and spans are toll-free, according to Moody's. Revenues inched up in May because of a 25-cent hike in one-way tolls, now at $3.75, up from $2 a dozen years ago.

Officials of the authority, which has been servicing the outstanding bonds from a reserve fund now mostly tapped out, were not immediately available to comment.

The outlook for the bridge and the debt are cloudy, according to Moody's, though operation of the facility will continue under a service contract with the Florida Department of Transportation.

"According to the trustee, this default situation appears likely to persist for some time, and the trustee is currently exploring options available for bondholders," Moody's said.

Local newspapers quoted Florida Transportation Secretary Ananth Prasad as saying the state would not step in to help the authority's bondholders.

"Make no mistake, we will not bail out this investment by the bondholders," Prasad said. "However, let me be clear: FDOT will continue to safely operate and maintain the Garcon Point Bridge."

(Editing by Dan Grebler)