REGIONAL TRANSPORTATION AUTHORITY At a Glance Bonds O/S$2.1B Swaps (Notional): Basis $392MM Float-to-Fixed $148MM Fixed-to-Float $444MM

REGIONAL TRANSPORTATION AUTHORITY

At a GlanceBonds O/S $2.1B

Swaps (Notional): Basis $392MM Float-to-Fixed $148MM Fixed-to-Float $444MM


FLOATING-TO-FIXED SWAPTION


• RTA’s Objective:

– Refund (Current) Fixed Rate Bonds– Lock-in Refunding Rates Two Years in

Advance

– Receive $$$$ Up Front


• RTA’s Experience:

– Floating-to-Fixed Swaption

– Lock-in Refunding Rates Two Years in Advance

– Receive $10MM Up Front


Receive Pay • ‘96 Bonds 5.25%

• Swaption 70%Libor 4.95%Float-to-Fixed

• VRDO Mkt. Rate(Approx

BMA)


Where we stand: Receive Pay

• Swap 70%Libor 4.95% 1.88%

• VRDO Mkt. Rate(Approx

BMA) 1.86%


HEDGE SWAP


HEDGE SWAP

A swaption designed to protect against higher interest rates when future bonds

are issued.


HEDGE SWAP

Strategy works if interest rates rise

Risk is that interest rates do not rise


HEDGE SWAP

This is a floating-to-fixed swaption


HEDGE SWAP

We agree to pay a fixed rate (above market)

And receive a variable rate (BMA)


HEDGE SWAP

• To breakeven or profit, rates must rise at least to benchmark rate


HEDGE SWAP

If rates do not rise, we would use bond proceeds to cash settle.


HEDGE SWAP

Rates rose 35bps (breakeven was 9bps) and we cash settled.


DEBT SERVICE DEPOSIT AGREEMENTS


DEBT SERVICE DEPOSIT AGREEMENTS

• Receive present value of future sinking fund deposits up front.

• Give up investment earnings on sinking fund deposits

Documents

REGIONAL TRANSPORTATION AUTHORITY At a Glance Bonds O/S$2.1B Swaps (Notional): Basis $392MM Float-to-Fixed $148MM Fixed-to-Float $444MM