News Release Archive
FINANCE--Investors Buy $100m Bond Issue from Bridge Commission
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The Halifax-Dartmouth Bridge Commission has successfully
refinanced its outstanding long-term debt. The new $100-million
toll revenue bond issue has a coupon rate of less than six per
cent, compared to the existing term loan debt, with a rate of 11
per cent.
The interest cost saving on this issue allows the bridge
commission to rebuild approach decks and expand the Angus L.
MacDonald Bridge, refinance the old debt, keep tolls the same and
still pay off a considerable amount of the $100-million debt over
the next 10 years.
"This remarkable debt management effort by the administration of
the commission closes the book on a very sorry chapter on a
financing venture that went badly for Nova Scotians," said
Finance Minister Bill Gillis.
In 1970, a decision was made to finance the construction of the
A. Murray MacKay Bridge with low-interest loans in foreign
currencies. That decision allowed the tolls to be kept low.
But the subsequent decline in the value of the Canadian dollar
against the German mark and the Swiss franc wiped out the
interest cost advantage, then added massively to annual debt
servicing costs.
As a result, at its peak, the commission's debt amounted to
nearly $125 million, compared to the total cost of construction
for both harbour bridges of about $42 million.
On Dec. 4, dealers from across Canada, including a number of
local brokers in Nova Scotia, sold out the $100-million toll
revenue bond issue to investors. To assist the bridge commission
in meeting its construction schedule, the province will provide
the commission with a supplementary line of credit of up to $30
million.
The credit rating on the toll revenue bonds is even better than
the province's own credit rating.
In fact, the bridge commission's credit rating is the highest for
any entity in the Atlantic region. Therefore, it was possible to
have the commission issue the bonds without a provincial
guarantee. Because the bonds stand on their own, the province's
potential liability is limited to a maximum of $30 million on the
line of credit.
When the bonds come due in the year 2007, it's expected the
commission will have put aside enough money to pay back a major
portion of the toll revenue bond issue.
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Contact: Bruce Cameron
Finance Department
902-424-8787
E-mail: infofinance@gov.ns.ca
ngr Dec. 5, 1997 2:00 p.m.
