Gov. Whitmer Announces Second Round of Rebuilding Michigan Bond Sale

Gov. Whitmer Announces Second Round of Rebuilding Michigan Bond Sale

August 25, 2021| Lansing, MI | AMN – Gov. Whitmer today announced that the Michigan Department of Transportation (MDOT) closed on an additional $800 million bond issue, the second installment in Gov. Gretchen Whitmer’s $3.5 billionRebuilding Michigan program. The bonds closed today will cover the cost of rebuilding some of Michigan’s most highly traveled freeways, including a $120 million project in progress on I-94 in Jackson County. When all of the $3.5 billion bonds are sold over the next few years, they will finance or help accelerate rebuilding or major rehabilitation of 122 major highwaysacross the state, putting Michigan first. 

“This $800 million bond issued under the Rebuilding Michigan plan will create thousands of good-paying jobs and drive our economy forward,” said Governor Whitmer. “The Rebuilding Michigan Plan puts Michigan drivers first by building up our economy stronger for communities and small businesses and helping families stay safe on the road as they drive to work, pick their kids up from school, and run errands. Investments in infrastructure are a priority for my administration, and I am proud that we are fixing the damn roads without an increase at the gas pump.” 

S&P Global Ratings assigned a AA+ long-term rating to the latest bond sales, and reaffirmed its AA+ rating for the Michigan State Trunkline Fund bonds that are outstanding. An independent analysis from Moody’s Investor Services noted that despite a decline in fuel taxes and registration fees attributed to the pandemic, the bonds benefit from strong coverage by constitutionally dedicated funds.    

  ”The state has shown the ability to raise taxes and fees charged for road use in recent years, helping improve infrastructure funding capacity and offsetting stagnant motor-fuel use trends,” Moody’s said. “Available revenue provides ample debt service coverage to accommodate planned new issuance as well as revenue fluctuations driven by changing economic conditions or other trends.” 

The bond sales are being co-managed by the Oakland-headquartered financial services firm Siebert Williams Shank & Co., LLC. President and equity owner Suzanne Shank has managed several MDOT bond sales in the past.  

“The governor’s Rebuilding Michigan plan is doing exactly as intended, capitalizing on low-interest rates to replace crumbling freeways and bridges across the state,” said MDOT Director Paul C. Ajegba. “The latest bond sales and favorable market reaction underscores the wisdom of the bond sales.” 

In a unanimous vote in January 2020, the Michigan State Transportation Commission authorized the department to issue and sell $3.5 billion in bonds backed by state trunkline revenues.  

Total proceeds will be $1.008 billion from the $800 million in bonds closed on today. The all-in true interest costs are 2.35percent. The maximum annual debt service maintains 5.9 times coverage against revenues, well above the four times coverage required by State Transportation Commission policy.   

In addition to the Rebuilding Michigan Bonds issued, MDOT took advantage of favorable market conditions and refunded $68.2 million of Trunkline Bonds.  This refunding will yield net present value savings of $19.3 million, which will be directed back into the Trunkline road and bridge program. 

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