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Second round of road bonds go to market

CHARLESTON — The next round of general obligation bonds to fund projects through the Roads to Prosperity program will go on sale next week.

Gov. Jim Justice said during a press conference at the Capitol that the second round of bonds for $600 million will go on sale Tuesday, Dec. 3.

“Everybody’s reporting back that…we’re going to the marketplace and we’re going in the marketplace with good ratings and everything,” Justice said.

Justice said he recently sat in on phone calls between the Department of Revenue and bond rating agencies. As of Nov. 21, the three big bond rating agencies — Moody’s, Standard and Poor’s, and Fitch — have all given West Virginia positive ratings for its general obligation bonds.

Moody’s gave West Virginia an Aa2 rating, Fitch gave an AA rating, and Standards and Poor’s gave the state an AA- rating. The ratings agencies cite the state’s healthy Rainy Day Fund and its willingness to tackle long-term debt, such as pension and post-employment benefit liabilities.

“The stable outlook reflects our view of the state’s strong fiscal position of increasing budgetary reserves and strong debt and liability profile,” said Timothy Little, an analyst with Standard and Poor’s.

The bonds are expected to have maturities ranging from one to 25 years with stable long-term outlooks. Justice said he believes the ratings and good interest rates could bring in additional money.

“We’re going to ring the bell with a premium to the tune of somewhere close to $100 million, and that’s going to be free money too,” Justice said.

Voters approved the Roads to Prosperity Amendment in 2017, allowing for the issuance of bonds not to exceed $1.6 billion to improve major roads and bridges as well as new road construction.

West Virginia has $299 million in GARVEE bonds that were issued in 2017 and 2018, plus $800 million in first-round general obligations bonds issued in 2018 and $166 million in 2018 Parkways Authority bonds. Premiums for these bonds total $169 million, bringing the total road bond funding to $1.3 billion.

The West Virginia Legislature approved two concurrent resolutions in July allowing the state to seek $600 million for the second round of road bonds, plus an additional $200 million on a third round of bonds after July 1, 2020. On Nov. 18, the Legislature passed Senate Bill 2003, granting the Department of Revenue $25 million in spending authority for debt service payments on those bonds.

Since the Roads to Prosperity went into effect, more than 154 projects have been completed, including major new road construction, bridge replacement and repair, paving, and other projects — 223 miles of projects total. Another 229 projects — 322.7 miles worth — are ongoing.