SANTA FE—The New Mexico Department of Transportation recently saved $32.9 million in taxpayer money that will be returned to road projects over the next four years.
The savings are generated by refinancing bond debt at lower interest costs on the market.
“We went from an average interest rate of 5.02 percent to 1.83 percent, achieving $32.9 million savings by refinancing fixed rate debt of $220.4 million. This is a great deal for the state,” said Marcos Trujillo, Bond Manager for the NMDOT.
Standard and Poor’s rating agency upgraded the NMDOT bond rating to AAA based on the agency’s management of its finances through the recession and demonstrating strong debt coverage supporting the bonds.
While the State Road Fund has been steadily improving since the recession of 2007, the rating agency believed the NMDOT to be a strong credit.
“We are committed to improving our financial situation and returning as many resources back to our critical highway infrastructure by reducing costs where we can,” Interim NMDOT Secretary Tom Church said.
NMDOT and the State Transportation Commission continue to review the agency’s financial position and current market conditions for potential savings in the future.
“The commission is committed to capturing any interest rate savings to increase system maintenance funds for New Mexico roads,” commission chairman Pete Rahn said in a prepared statement. “We are particularly pleased with the AAA rating upgrade on our senior-lien debt by S&P, which reflects not only our strong debt covenants but the intense management of the department finances.”
The NMDOT has $1.68 billion in outstanding principal bonds issued for projects. The NMDOT has been proactive in monitoring market conditions within the last two years and has achieved more than $50 million in savings, which has allowed that money to be used on roads and other infrastructure throughout New Mexico.