Policy No..: MDTA 7009 Effective: August 16, 2005
c. Policy Statement 11. Debt service coverage for non-recourse debt (not backed by MDTA toll revenue) will be determined on a case by case basis for projects where MDTA is a non-recourse debt issuer. i. Non-recourse financings shall generally have minimum debt service coverage requirements of 120% of debt service. ii. An exception to this minimum for non-recourse financings may occur if there is a debt service “guarantee” from a rated municipality, authority, or entity with investment grade ratings. iii. Non-recourse financings shall not pledge MDTA’s toll revenues. iv. The MDTA has a self-imposed outstanding debt limit on non- recourse financings of $700 million, excluding GARVEE bonds (hereinafter defined). d. Policy Statement 12. Pursuant to §4-320 of the Transportation Article, and the statutory limits set forth therein, the aggregate principal amount of debt issued and secured by a pledge of future federal aid known as Grant and Revenue Anticipation (GARVEE) bonds will not exceed $750 million, and the maturity date for such debt may not be later than 12 years after the date of issuance. e. Policy Statement 13. The MDTA must adhere to the Governor’s Executive Order 01.01.1998.07 (Executive Order) which requires annual review and approval of planned State agency debt by the Department of Budget and Management (DBM) and the Governor. The Budget Committee Narrative of fiscal 2023 also requests that any rating agency reports associated with a financing be forwarded to the State Treasurer’s Office in advance of the sale or concurrently. For clarification, credit ratings are not required for all financings. i. Notice must be given to DBM at least 30 days in advance of any bond issuance of $25 million or greater. ii. The MDTA will comply with the annual reporting requirements as set forth in the Executive Order and the Budget Committee Narrative for rating reports if applicable/available as part of a financing. III. Debt Structural Features a. Policy Statement 14. The weighted average maturity (WAM) of the tax- exempt debt issued by MDTA cannot exceed the weighted average life of the improvements for any project. i. The MDTA debt must not exceed a term of 40 years per Maryland law, §4-302(b) of the Transportation Article. b. Policy Statement 15. Debt will generally be structured to achieve the lowest possible net financing costs pursuant to MDTA’s policies and objectives. i. Whenever feasible, structuring debt with level debt service costs over the life of the issue is preferred. ii. Backloading will be considered in order to match debt service
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