Report: Company Behind SH 130 Toll Road in Danger of Default

^{Editor's note: This story has been updated to include a response from the SH 130 Concession Company.}

The company behind a privately operated Texas toll road that sports the country’s fastest speed limit is dangerously close to defaulting on its debt, according to a credit rating agency.

According to a report released this week by Moody’s Investors Service, the SH 130 Concession Company, which operates the 41-mile southern portion of State Highway 130, is low on cash and scrambling to get an upcoming payment deadline waived, 

The private consortium behind the project owes more than $1 billion and lacks the funding to pay off an upcoming debt payment due on June 30, according to the report. The report adds that the company has “depleted all but $3.3 million of available liquidity reserves.”

In an emailed statement, SH 130 Concession Company spokeswoman Megan Compton did not dispute any of the findings in the Moody's report.

"We remain committed to our long-term investment in SH 130 and are confident that this first-class roadway will play an increasingly important role in relieving congestion along the gridlocked I-35 corridor as Central Texas continues to grow,” Compton said. 

The southern portion of SH 130 between Austin and Seguin opened in October 2012 to much fanfare. Along with boasting an 85 mph speed limit, the fastest in the country, the SH 130 Concession Company had signed a first-of-its-kind-in-Texas deal to build and operate the toll road for 50 years in exchange for a portion of the toll revenue.

Yet the company’s projections for traffic and toll revenue were overly optimistic. In October, Moody’s downgraded $1.1 billion of debt tied to the project by five notches, from B1 to Caa3, considered junk status. The financial situation has not markedly improved, according to the rating agency’s latest report.

“Fiscal 2013 revenue performance was about 60 percent below original forecast and fiscal 2014 is likely to be 70 percent below the original forecast,” the report states.

Company officials are working with the project’s lenders on waiving a portion of this month’s debt payment while not triggering an official default, according to the report. The company is also attempting to restructure its debt based on a new traffic and revenue study, according to the report.

SH 130 was designed to allow drivers a route to travel through San Antonio and Austin and avoid the traffic on Interstate 35. The consortium spent $1.3 billion to build the southern portion of SH 130, known as Segments 5 and 6. The northern portion (Segments 1-4) is publicly funded.

State officials have expressed hope that the road will someday relieve congestion from Interstate 35, particularly trucks for Mexico passing through the region and headed north. Company officials have also predicted that future development in small towns along the toll road’s route would boost traffic over the life of its 50-year contract.

For most of 2013, TxDOT subsidized trucks to use the road at a discounted rate. That turned out to be a lasting boost to the road’s performance as commercial traffic levels have not dropped since the discount ceased, according to Moody’s.

“Commercial traffic levels have held since the discount ceased and with the strengthening credit profile of Mexico … commercial traffic along SH 130 is likely to grow over the long-term,” the report states.