Fitch Ratings recenty updated the ratings of several transportation authorities in Florida, California, Virginia, and New York.
Florida Department of Transportation’ Skyway Bridge was given a ‘A+’ rating on its series 2019A senior revenue bonds. In assigning said rating, Fitch Ratings reported:
The ‘A+’ senior revenue bond rating reflects the facility’s strong financial metrics with a 10-year average rating case senior debt service coverage ratio (DSCR) of 3x. The facility benefits from low toll rates, low demonstrated elasticity of demand, and a flexible pricing mechanism that has produced consistent, annual toll rate hikes that keep pace with inflation. These strengths are somewhat offset by the facility’s limited catchment area and small size, which leaves it more vulnerable to localized demand shocks and event risks.
Alameda Corridor Transportation Authority was given an ‘A’ and ‘BBB’ ratings on its 2022A&B senior lien revenue bonds and series 2022C second subordinate lien revenue bonds, ‘A’ on its $916 million in outstanding senior lien bonds, ‘BBB+’ on its $499 million in subordinate revenue bonds, and ‘BBB’ on its $557 million in second subordinate revenue bonds. Fitch Ratings explained:
The ratings reflect a vital rail corridor that handles nearly a third of the throughout for the San Pedro Bay ports (SPB ports; Port of Los Angeles and Port of Long Beach, both rated AA/Stable). The ‘A’ rating on the senior lien reflects superior coverage levels, stronger structural protections, and an expected lack of dependence on shortfall advances to cover obligations at this lien level, while acknowledging the open nature of the lien for future restructuring transactions. The first subordinate and second subordinate bond ratings of ‘BBB+’ and ‘BBB’, respectively, reflect the liens’ subordinated positions within the ACTA debt structure, lower coverage levels and weaker structural protections.
Chesapeake Transportation System’s rating was given and ‘A-‘ rating on its $168.1 million senior toll road revenue bonds series 2012A and 2012B. Fitch Ratings reported:
CTS’ rating reflects its demonstrated traffic base from its expressway, complemented by the newer, Dominion Boulevard commuter traffic base, each serving the stable and growing Chesapeake, VA market. The rating further reflects the approved long-term schedule of future toll increases on both facilities. CTS’s strong traffic and revenue (T&R) growth since the opening of Dominion in February 2017 and its substantial liquidity position are additional credit strengths that help to support its financial profile. Senior lien debt service coverage ratio (DSCR) remains sound at 2.3x in fiscal 2021 and averages 2.0x in the next 10-years in our rating case.
Lastly, New York State Thruway Authority was given an ‘AA+’ rating on its general highway and bridge trust fund bonds. In affirming the rating, Fitch Ratings reasoned:
Dedicated highway and bridge trust fund (DHBTF) bonds are special obligations of the New York State Thruway Authority payable from dedicated transportation revenues in the highway and bridge trust fund in the form of cooperative agreement payments (CAPs), subject to annual appropriation by the state legislature.
The ‘AA+’ rating on DHBTF bonds is linked to New York State’s IDR given the requirement to appropriate for debt service. In the event of non-appropriation, transportation receipts deposited to the DHBTF would be unavailable for highway and bridge capital needs, an amount that has approximated $2 billion annually over the last decade. This represents a meaningful portion of the annual capital budget. The state’s executive budget capital plan for fiscal 2023-2027 forecasts that $10.5 billion, a quarter of transportation capital spending, will derive from the DHBTF over the plan period.
