A toll road operator in California's Orange County, the Foothill-Eastern Transportation Corridor Agency, is at risk of defaulting on its bond payments if it does not refinance more than $2 billion of outstanding debt, State Treasurer Bill Lockyer said on Wednesday.

"Without the refinancing, the risk of default is unacceptably high, threatening negative consequences not only to the agency and its bondholders, but to local governments and the state as well," Lockyer said in a letter accompanying a report supporting the agency's planned debt restructuring.

The agency's toll roads were built with proceeds from toll-revenue bonds issued in the 1990s. Traffic and toll collections have not been as strong as expected, the report noted, adding that revenues are below the level needed to keep up with increases in future debt service.

Orange County declared bankruptcy in 1994. With about 3 million residents, the Southern California county was the largest U.S. county to have asked for protection from creditors under Chapter 9 until Jefferson County, Alabama, did so in 2011.

The Foothill-Eastern Transportation Corridor Agency, one of two joint-powers authorities created in 1986 to operate roads in Orange County, plans to offer up to $2.4 billion of refunding revenue bonds to refinance its outstanding debt. These refunding bonds are rated at just above speculative grade with a Baa3 rating from Moody's Investors Service and a BBB-minus rating from Fitch Ratings.

The agency had initially planned to offer the refunding bonds next week, but has postponed their sale until later this month at the earliest, agency spokeswoman Lisa Telles said. The bond sale will be managed by Goldman Sachs and Barclays.

The report prepared by Montague DeRose and Associates, a consulting firm for public-sector clients, supports the debt restructuring because its lower interest rates should help ease future debt payments.

The Montague report recommended that the Foothill-Eastern Transportation Corridor Agency set aside a large share of savings stemming from the debt restructuring.

The report also recommended that Caltrans, California's transportation department, modify its Cooperative Agreement with the toll-road agency to protect itself and bondholders.

Caltrans is technically the owner of the agency's toll roads. The Orange County agency reimburses Caltrans for maintaining the toll roads so the state has a stake in the agency's finances, according to a Lockyer spokesman.