Talking Michigan Transportation Michigan panel boosts funding to rebuild major highways
Mar 12, 2026
Patrick McCarthy, MDOT Director of Finance who oversees state transportation financing and bond deals, discusses the STC’s amendment to boost bonding for major highway and bridge rebuilds. He explains how bond premiums increased funding. They also cover debt trade-offs, investor appeal of MDOT bonds, coverage rules, refunding strategy, and timing of new revenues.
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Truing Up Projects To Actual Bond Proceeds
- MDOT amended the Rebuilding Michigan project list to match available bond proceeds without increasing the $3.5 billion principal or extending the timeline.
- Market-driven premiums and interest earnings produced extra proceeds, allowing three additional projects to be added to the funded list.
Bond Premiums Created Meaningful Extra Funding
- MDOT sold bonds at a premium because investors view the bonds as low-risk and attractive, generating proceeds above the $3.5 billion principal.
- Example: investors pay more than a $5,000 face value (e.g., $5,100) to earn the offered interest, creating extra funds.
Premiums Are Helpful But Debt Remains
- Premiums increase upfront proceeds but do not eliminate debt service; issued bonds still require repayment with interest over time.
- Financing accelerates projects now but creates long-term liabilities that MDOT must manage responsibly.