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Credit crunch could spell trouble for MetroLink financing

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By Matt Sepic and Adam Allington, KWMU

St. Louis – The transit agency Metro says financing its new cross-county light rail line could cost more because of the sub-prime mortgage crisis.

The agency is paying for the $682 million project primarily with revenue bonds that are backed by sales taxes. Metro Chief Financial Officer John Noce said some of that debt has a variable interest rate that could go up because of the credit squeeze.

"There's a potential for a problem, for the cost of our variable rate debt currently paying around three percent to double if the bonds are not remarketed," Noce said.

Noce said the higher interest rate may cost Metro an extra $4.5 million dollars per year until a lower rate is found.

Metro sold $400 million worth of sales tax-backed bonds in 2002 to finance the MetroLink line. However the agency had to go back to the bond market in 2005 because of major cost overruns.

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