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TRANSACTIONS NEWSLETTER ONLINE

February 2002

Bond Swap Saves Millions

Acting in its role as the Bay Area Toll Authority (BATA), the Commission has converted $300 million in variable-rate bonds to fixed-term obligations, potentially saving over $70 million in debt payments over the 35-year life of the bonds.

The transaction, known as an interest rate swap, allows the toll-bridge financing authority to take advantage of today's low-interest-rate market to lock in favorable rates and to remove the risk that rates could go higher in the future.

Proceeds from the BATA bonds, first issued in May 2001, are being used to finance the Regional Measure 1 program of major improvements to Bay Area toll bridges, including new spans for the Carquinez and Benicia-Martinez bridges and a widening of the San Mateo-Hayward Bridge.

"Homeowners with adjustable-rate mortgages often convert to a fixed rate when interest rates are low," said MTC Chief Financial Officer Brian Mayhew. "We're doing the same thing with these bonds."
-- Joe Curley

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