DALLAS -- As early as next month, the Oklahama Turnpike Authority may convert $50 million of year-old debt into variable-rate bonds through current refunding.

Richard Ridings, chief executive officer of the authority, said yesterday that his board and the state's two bond oversight commissions have already give approval to the transaction.

"We are considering it," he confirmed. "Our reasons for doing it would be twofold: to take advantage of savings opportunities and to also have a portion of our outstanding debt in variable-rate."

Mr. Ridings said estimates of savings by converting from fixed-rate to variable debt range from $1 million to $4.5 million over the life of the issue. Whether the transaction will ultimately be completed, he said, depends on market conditions and whether the authority obtains favorable terms with a letter of credit bank.

"The market is right for us right now," he said, adding that the differential spread between fixed- and variable-rate debt would be 200 basis points after costs.

Oklahoma Bond Adviser Jim Joseph said the proposed transaction could be beneficial if the market holds.

"The authority feels it can manage the risk," he said. "This would allow them to take advantage of the steep yield curve."

Mr. Ridings said the authority has not yet determined what maturities it might issue for the variable-rate debt.

Also, he said, a new selection process for underwriters to handle the negotiated transaction is not expected. Instead, the authority plans to choose a team from among the regional and Wall Street firms that underwrote the agency's other issues in the last year.

In May, a large syndicate underwrote a $608 million refunding of much of the single-A rated authority's debt.

When the state's joint Legislative and Executive Oversight Commissions approved that refunding, it also authorized the conversion of fixed rate debt to variable-rate bonds.

Mr. Joseph said the commissions gave conditional approval to the deal as long as costs of issuance did not exceed 1% and savings were at least 2% on a present-value basis. Also, the turnpike cannot have more than 10% of its outstanding debt in variable-rate instruments at any one time.

If completed, the $50 million transaction would mean that just under 8% of the authority's estimated $600 million in outstanding long-term revenue debt would be in a variable rate mode.

If the transaction is completed, it would mean that nearly all of the agency's outstanding debt will have been refunded over the past year. "All but a small portion would be refunded," said Mr. Joseph. "I think it was about $30 million worth that was not efficient to refund."

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