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Hilltop Securities outlines financing structure, credit risks for Hidalgo County RMA toll project
Summary
Hilltop Securities presented the RMA—oard with the authority ebt profile, bond ratings, and the principal risk for investors: traffic and revenue forecasts. Presenters described roughly $279 million outstanding and said vehicle-registration fees are an important revenue backstop for early years.
Hilltop Securities told the Hidalgo County Regional Mobility Authority board on Feb. 2025 that the authority—urrently carries several series of debt tied to the 365 Tollway and related projects and that the largest near-term risk for investors is the revenue forecast for a greenfield toll facility.
Richard Ramirez, managing director at Hilltop Securities, said the authority has issued multiple series since inception and currently has about $279 million outstanding. Ramirez said the 2020 series are supported fully by vehicle-registration-fee (VRF) revenues while the 2022 series are supported by a combination of VRF and toll revenues. He added that VRF revenues make up roughly 25% of total revenues but cover about half of near-term debt service.
"Well, the biggest thing is is the revenue forecast," Ramirez said, describing the challenge of predicting traffic for a toll road with no local tolling history. "Investor has to look carefully, that traffic and revenue report that's certified."
Hilltop staff explained how rating agencies evaluate the authority: governance, the financial plan and debt position, and the local economy and usage patterns for toll facilities. Toll-linked bonds issued in 2022 were described as rated in the lower-investment-grade range (triple-B and triple-B minus), while the VRF-backed debt was rated higher (around double-A minus), reflecting the steadier nature of vehicle-registration revenues.
Colby Echols, Hilltop Securities, said the authority lso has bond covenants requiring 1.25 times coverage for senior lien bonds and 1.2 times coverage on combined senior and junior liens, and that additional-bond tests apply before new debt can be issued. Ramirez noted that ratings typically start lower for new toll projects and can improve as toll collections mature.
Board members asked when legal or construction setbacks would affect ratings. Ramirez said material events must be disclosed through the Municipal Securities Rulemaking Board process and that the annual rating agency review can trigger on-the-spot inquiries if problems arise. "If you delay opening and there's a big judgment against you, at whenever you have an event that's material, we have to report it," Ramirez said.
Why this matters: the authority is in the financing stage for a major region-scale toll project. Credit ratings, revenue forecasts and the mix of VRF and toll revenues will shape borrowing costs and investor demand, and therefore the RMA's ability to finance construction and service debt.
Board takeaways from the presentation included that ratings are assignment-dependent, that VRF provides a meaningful backstop in early years, and that the RMA must maintain clear, timely reporting and meet indenture covenants to reassure investors.
The Hilltop presentation covered bond structure, ratings, the role of financial advisers and underwriters, and the need for continuing disclosure to investors. Hilltop and the board also reviewed the authority's outstanding series and maturity schedules, and how toll rate escalation and traffic growth were assumed in long-term debt service plans.
The board did not take a financing vote during the presentation; the session was informational.
