Bonds

Wells Fargo’s participation in Oklahoma Turnpike bond sale under review

Wells Fargo’s role as senior manager in a potential $500 million bond sale for the Oklahoma Turnpike Authority is under review after the bank landed on the state treasurer’s list of companies banned from government contracts. 

The 13 financial institutions on the list released Wednesday were determined to be boycotting the oil and gas industry and are thereby ineligible for state and local government business under a 2022 law.  Wells Fargo, which was picked last summer to head the OTA bond deal,  JPMorgan Chase and Bank of America were the only municipal bond investment banks to be tagged as boycotters.

“The (turnpike) authority is reviewing the matter in consultation with representatives of the Oklahoma State Treasurer’s office and counsel to the authority to determine the appropriate way forward for the Oklahoma Turnpike Authority,” Wendy Smith, OTA’s finance and revenue director, said in an email.

Wells Fargo declined to comment.

The Energy Discrimination Elimination Act of 2022 took effect Nov. 1, months after OTA assembled the underwriting team for the second senior lien revenue bond issue, which would begin financing for a $5 billion, 15-year turnpike extension project known as ACCESS (Advancing and Connecting Communities and Economies Safely Statewide) Oklahoma.  Stifel, Nicolaus & Company; Morgan Stanley; BOK Financial; and Raymond James were selected as co-managers.

Litigation brought by homeowners in the path of the extensions delayed the bond sale, which remains before the Oklahoma Supreme Court, which has been asked by OTA to validate the debt.  If the bonds are validated, OTA would have to return to the state’s Council of Bond Oversight because that body’s conditional approval of the debt expired in February.

Last month, OTA halted construction work related to the ACCESS project over concerns about its access to the municipal bond market.

In March, Oklahoma Attorney General Gentner Drummond ordered an audit of the OTA, citing concerns he heard from lawmakers, state employees, and others about “improper transfers between the OTA and the Department of Transportation; improper contracting and purchasing practices; and inadequate internal financial controls.”

The OTA has also come under scrutiny by the state legislature, where several reform bills were introduced this session.

The Republican-controlled House and Senate have passed slightly different versions of a bill allowing legislative leaders to appoint four of the six OTA board members, shortening their terms to six years from eight, and prohibiting them from voting on items in which they have a direct financial interest.

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