High-speed rail sells its first construction bonds, will get $1.25 billion for project:
The first California high-speed rail bonds to support construction were sold Thursday and will pour $1.25 billion into the project.
“It’s a huge milestone in the program,” spokeswomen Lisa Marie Alley said. “It means we have the ability to use the voter-approved Prop 1A money to build the nation’s first high-speed rail system.”
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Voters approved $9.85 billion in Prop 1A bonds in 2008 to build the San Francisco-Anaheim first phase of a system that is to eventually include Sacramento and San Diego.
Construction has been under way for two years in the San Joaquin Valley financed by a $2.35 billion federal stimulus grant during the Obama administration’s first year. That money is scheduled to be spent by the end of September and no further federal funding is on the horizon.
The only previous sale of high-speed rail bonds was for $1 billion, which has paid for the costs of design and environmental reviews, according to the state treasurer’s office.
Because the taxable bonds are backed by the State of California rather than the high-speed rail authority, the sale reflects investors’ faith in the state’s improving credit standing rather than a direct vote of confidence in the rail project itself.
“The rates Thursday were in line with where the market is now and we were pleased with the results,” said Marc Lifsher, spokesman for Treasurer John Chiang.
Series A bonds that mature April 1, 2018 will pay 1.248 percent, a rate that ranges up to 2.367 percent for bonds maturing April 1, 2022. Series B tender bonds will pay 2.193 percent on the April 1, 2020 tender date. Series C floating rate bonds will pay the monthly LIBOR rate plus 0.78 percent.
The bonds were rated Aa3 by Moody’s Investor Services, AA- by Standard & Poor’s and AA- by Fitch Ratings.
The California High-Speed Rail Authority returns to court next week in Sacramento to defend itself against a lawsuit from Oakland attorney Stuart Flashman that seeks to block the authority from spending the bond proceeds.
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