Northwest Parkway officials have canceled a $428 million debt restructuring that was designed to give the toll road financial breathing room.
Toll revenues on the 11-mile, privately owned highway from I-25 to a point near the Boulder Turnpike have been well below projections issued in 2001, and officials had hoped a bond refunding would push higher debt payments further into the future.
But Friday, officials said the debt refunding was being postponed because investors offered too low a price on about $228 million in uninsured bonds that the parkway attempted to sell a week ago as part of the restructuring.
It was apparent that another $200 million in AAA-rated, insured Northwest Parkway bonds would sell easily, but highway officials had to cancel the entire sale because the offerings were linked as part of a package deal, said parkway executive director Steve Hogan.
A successful refunding would have enabled the parkway to pay off some of its debt early without penalty, Hogan added.
Northwest Parkway has encountered financial troubles just as the Colorado officials are considering construction of new toll roads.
Following Friday’s cancellation of the transaction, Fitch Ratings downgraded the rating on about $405 million in Northwest Parkway 2001 senior debt to noninvestment grade BB- from investment grade BBB-. Noninvestment grade bonds are also called “junk bonds.”
Fitch also attached a “negative outlook” to the Northwest Parkway debt.
“The (2001) bonds are now below investment grade and have a higher risk profile,” said Scott Trommer, a senior director for Fitch in New York.
The downgrade reflects “a constrained financial environment where toll revenues are not expected to be sufficient to pay the escalating debt service,” Fitch said in a report issued Friday.
On Jan. 1, Northwest Parkway will increase the highway’s full-length toll to $2 from the current $1.75, and Trommer said the parkway may have some leeway for additional toll hikes to ease the debt-service burden.
Hogan said Fitch’s downgrade is only significant from a public relations standpoint because insurance that the parkway bought on the 2001 bonds boosted them to a top-rated AAA from the basic BB- status.
Northwest Parkway expects to attempt another debt restructuring next year, Hogan said, “so we can pay off the bonds as quickly as possible.”
Staff writer Jeffrey Leib can be reached at 303-820-1645 or jleib@denverpost.com.
