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REGIONAL TRANSPORTATION AUTHORITY

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. FLOATING-TO-FIXED SWAPTION. REGIONAL TRANSPORTATION AUTHORITY. RTA’s Objective:

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REGIONAL TRANSPORTATION AUTHORITY

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

  2. REGIONAL TRANSPORTATION AUTHORITY FLOATING-TO-FIXED SWAPTION

  3. REGIONAL TRANSPORTATION AUTHORITY • RTA’s Objective: • Refund (Current) Fixed Rate Bonds • Lock-in Refunding Rates Two Years in Advance • Receive $$$$ Up Front

  4. REGIONAL TRANSPORTATION AUTHORITY • RTA’s Experience: • Floating-to-Fixed Swaption • Lock-in Refunding Rates Two Years in Advance • Receive $10MM Up Front

  5. REGIONAL TRANSPORTATION AUTHORITY ReceivePay • ‘96 Bonds 5.25% • Swaption 70%Libor 4.95% Float-to-Fixed • VRDO Mkt. Rate (Approx BMA)

  6. REGIONAL TRANSPORTATION AUTHORITY Where we stand: ReceivePay • Swap 70%Libor 4.95% 1.88% • VRDO Mkt. Rate (Approx BMA) 1.86%

  7. REGIONAL TRANSPORTATION AUTHORITY HEDGE SWAP

  8. REGIONAL TRANSPORTATION AUTHORITY HEDGE SWAP A swaption designed to protect against higher interest rates when future bonds are issued.

  9. REGIONAL TRANSPORTATION AUTHORITY HEDGE SWAP Strategy works if interest rates rise Risk is that interest rates do not rise

  10. REGIONAL TRANSPORTATION AUTHORITY HEDGE SWAP This is a floating-to-fixed swaption

  11. REGIONAL TRANSPORTATION AUTHORITY HEDGE SWAP We agree to pay a fixed rate (above market) And receive a variable rate (BMA)

  12. REGIONAL TRANSPORTATION AUTHORITY HEDGE SWAP • To breakeven or profit, rates must rise at least to benchmark rate

  13. REGIONAL TRANSPORTATION AUTHORITY HEDGE SWAP If rates do not rise, we would use bond proceeds to cash settle.

  14. REGIONAL TRANSPORTATION AUTHORITY HEDGE SWAP Rates rose 35bps (breakeven was 9bps) and we cash settled.

  15. REGIONAL TRANSPORTATION AUTHORITY DEBT SERVICE DEPOSIT AGREEMENTS

  16. REGIONAL TRANSPORTATION AUTHORITY DEBT SERVICE DEPOSIT AGREEMENTS • Receive present value of future sinking fund deposits up front. • Give up investment earnings on sinking fund deposits

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