Bonds sold to finance the San Francisco-Oakland Bay Bridge and other structures near the California cities traded at their widest penalty to benchmark municipal debt since 2012 after the opening of the $6.3 billion east span was delayed.
Tax-exempt Bay Area Toll Authority revenue bonds maturing in April 2028 traded yesterday for the first time since May at an average yield of 3.84 percent, the highest since the debt was sold in September, data compiled by Bloomberg show. The penalty relative to AAA rated munis is 1.26 percentage points, close to the highest since issuance, the data show.
The Oakland-based Metropolitan Transportation Commission, announced the setback in replacing the 2.2-mile (3.5 kilometer) eastern section yesterday as it released a report explaining the March failure of 32 seismic anchor rods. The project will make the structure carrying Interstate 80 over San Francisco Bay more resistant to earthquakes.
Part of the bridge collapsed in the 1989 Loma Prieta temblor that was centered about 60 miles (97 kilometers) south of San Francisco and registered 6.9 on the Richter scale.
The Bay Area Toll Authority, the financing agency for the commission, had about $7.7 billion of municipal debt rated by Moody’s Investors Service outstanding as of April 12, according to the New York-based company. It gives the bonds a grade of Aa3, fourth-highest.
Construction of the eastern span linking Yerba Buena Island and Oakland began in 2002, with completion forecast in 2007. Delays ensued after contractor bids exceeded cost projections, lawmakers fought over covering the expense and parts arrived 18 months late.
The discovery of defective welds and potentially phony inspections also slowed the work. The cost has, meanwhile, more than doubled.
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