BOSTON – Drivers on the Massachusetts Turnpike face higher tolls because the state is unable to sell bonds insured by a unit of troubled Ambac Financial Group Inc., Bloomberg News reported last week.
The Massachusetts Turnpike Authority, which oversees Boston’s Big Dig highway tunnels, is spending an additional $300,000 a month on its bonds because investors won’t buy $126.7 million in auction-rate securities backed by Ambac, state officials revealed. Rising debt costs threaten to derail agency efforts to avoid raising tolls this year, officials said.
The turnpike paid Ambac $6 million seven years ago for a bond insurance policy that it planned to use in the future to refinance up to $800 million it borrowed for the Big Dig.
The authority is now unable to sell $126.7 million in Ambac-backed bonds after the insurer’s credit rating fell because of subprime-related debt it guaranteed. •
