[Texgreen] Toll road bond financing is about to get harder

[Roger Baker]

Consider the tax-free municipal revenue bonds commonly used to  
finance TxDOT's toll roads.

If 10% of the total cost of financing the US183A toll road was to pay  
for bond default insurance, and that was during easy money times,  
then what do you imagine the cost of insuring the next batch of toll  
roads that TxDOT wants to build (like US290 W) is going to be?  
Especially in consideration of the article from the Washington Post  
at bottom concerning tight money and increasing lender caution.

Meanwhile, the Texas Legislature, with the predictable support of the  
road lobby, is going to try to get a constitutional amendment passed  
this fall that will allow them to issue $5 billion of road bonds.  
Bonds mean debt.

I don't think think Australian Macquarie bank deals put together by  
Cintra are going to be the easy path to toll road financing that  
TxDOT thinks they will be. Here is what is going on there:

http://worldnetdaily.com/news/article.asp?ARTICLE_ID=56753

In the case of 290, it will take at least another year before the  
enviro studies are revised and approved, and the bond deals will  
probably take longer. Meanwhile, federal funding for TxDOT is  
shrinking at an alarming rate due to recissions (takebacks), totaling  
$666 million SO FAR this year. As fuel costs keep rising, the picture  
gets worse; TxDOT refuses to even think about this important factor.

The link just below by Henry C.K. Liu is a good, long, coherent, and  
disturbing explanation of the problems affecting the US and global  
economy, IMO.

http://www.atimes.com/atimes/Global_Economy/IE09Dj01.html

-- Roger 

                  
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http://www.washingtonpost.com/wp-dyn/content/article/2007/07/25/ 
AR2007072502436.html?hpid=topnews

Easy Money, Lifeblood Of Economy, Is Drying Up


By Tomoeh Murakami Tse and Dina ElBoghdady
Washington Post Staff Writers
Thursday, July 26, 2007; Page A01

NEW YORK, July 25 -- In just a few days, shares of Internet travel  
company Expedia lost 12 percent of their value, one of the highest- 
flying executives on Wall Street watched his fortune shrink and the  
nation's largest mortgage lender said many Americans with good credit  
were in danger of losing their homes.

At the root of those seemingly unrelated events is a single new  
reality, one that could portend trouble for the broader U.S. economy:  
The era of cheap money appears to be ending.

Easy credit has been the economy's lifeblood in recent years. It gave  
people who previously couldn't afford homes a crack at the American  
dream. It fueled multibillion-dollar takeovers of some of corporate  
America's biggest names. It buoyed the stock market and propped up  
the prices of many other assets.

But now, the investors who a few months ago were willing to lend  
money to Wall Street at low interest rates, on loose terms, are  
balking as they worry about having to pay the price for lax lending  
standards.

The trouble started in one of the shakiest sectors of finance, home  
mortgages for people with bad credit, but it is spreading. As easy  
credit dries up, some huge corporate deals are being delayed and  
could unravel.

The question now is how far will the pain spread, and how many people  
will get hurt as it does.

"When people get scared, they tighten up all over," said A. Gary  
Shilling, president of the investment firm that bears his name. He  
said he expects housing prices to fall significantly further. "This  
kills consumer spending," he said of the credit crunch. "We think  
we'll be in a recession as a result by the end of the year. And that  
will spread globally because U.S. consumers still are the buyers of  
first and last resort for the excess goods and services produced  
around the world."....