After years of delay and the failure of negotiations between the state’s finance authority and bondholders, Indiana is looking to take control of a $325 million public-private partnership aimed at extending Interstate 69.
The announcement that talks between stakeholders had failed to produce an agreement led both Fitch and Standard & Poor’s to downgrade bonds issued by I-69 Development Partners, the developer of the I-69 Section 5 project. Bonds are now rated just a notch above default.
The I-69 group, led by Madrid-based Isolux Corsan and Canadian pension fund manager PSP Investments, was picked to complete the project in February 2014. The extension, which would run 21 miles from Bloomington to Martinsville along state road SR-37, was expected to be completed by the end of 2016. But financial difficulties at Isolux Corsan, which in March filed to avoid bankruptcy, and struggles by the developer to pay contractors have led to a series of missed deadlines.
The state announced the project’s expected completion date will once again be pushed back, this time from May 2018 to August 2018, the fourth such delay. The half-finished project will cost around $237 million to complete, but just $72 million is available, according to the finance authority. The project is now expected to come in approximately $162 million over budget, according to Fitch.
The agency said the private activity bonds’ rating remains on negative watch, with resolution depending “on a global solution between all involved parties or an agreement between [the finance authority] and bondholders that transitions the project to state control”. The ratings agency later added, though, that the project’s difficulties are unlikely to impact the state’s credit profile.