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09 Nov 2017
New York, November 09, 2017 -- Issue: General Revenue Bonds, Series 2017C-2; Rating: Aa3; Rating Type: Underlying LT; Sale Amount: $200,000,000; Expected Sale Date: 11/22/2017; Rating Description: Revenue: Government Enterprise;
Summary Rating Rationale
Moody's Investors Service has assigned a Aa3 rating to the Triborough Bridge and Tunnel Authority, NY's (TBTA or MTA Bridges and Tunnels) approximately $200 million General Revenue Bonds, Series 2017C-2. The 2017C-2 bonds will retire certain TBTA BANs and finance TBTA bridge and tunnel projects. Moody's maintains a Aa3 rating on the TBTA's outstanding general revenue bonds totaling approximately $7.21 billion and an A1 rating on the subordinate lien general revenue bonds totaling $1.47 billion. We also maintain a short-term MIG1 rating on the Series 2017A Bond Anticipation Notes. The outlook on the long term ratings is stable.
The TBTA's Aa3 senior and A1 subordinate lien ratings are based on the essentially of its facilities to the NYC metropolitan region and strength of its financial metrics which are among the strongest of all toll road facilities. These strengths are tempered by the organizational structure that transfers excess revenues to support the MTA transit and commuter operations and reduces liquidity directly available to bondholders. The potential additional debt for the TBTA's 2015 to 2019 capital program could result in lower than previously forecasted debt service coverage ratios (DSCRs); however, the TBTA has historically managed its capital needs with reasonable and timely toll rate increases.
The short-term MIG1 BAN rating on the Series 2017A notes is based on the TBTA's strong expected market access as a large, frequent issuer with strong long-term credit; its plan to issue take out bonds greater than 30 days in advance of the BAN maturity; good management planning around the take out process; and, in the event of an unlikely extended market disruption, internal liquidity balances that for the past three years have been enough to pay for the full amount. The pledge to pay principal and interest on the 2017A notes is only from proceeds of other notes, proceeds of the take out bonds, or subordinate lien revenues for the payment of interest on the notes and are not secured by any other funds, including the TBTA's cash balances on hand.
Rating Outlook
The stable outlook incorporates our expectation of continued steady regional economic growth, low traffic elasticity in response to toll rate increases and the implementation of another planned rate increase in 2019 to sustain strong DSCRs. The ratings reflect solid credit fundamentals and assume that the TBTA will continue to grow net revenues; prudently fund asset maintenance and support senior lien revenue DSCRs at or above the 1.75x board adopted target and total DSCRs at or above 1.50x.
Factors that Could Lead to an Upgrade
- Sustained higher than historic growth in traffic and revenues that signals a shift in the importance of the TBTA's assets
- Clarity on future long-term capital requirements for both the TBTA and MTA that allows overall debt metrics and DSCRs to improve over the long-term
- Dedication of additional financial liquidity to support TBTA bondholders could have a positive impact on the credit
Factors that Could Lead to a Downgrade
- Significant declines in traffic and revenue or demonstrated higher elasticity from toll rate increases on the facilities
- Greater than currently expected borrowing for capital projects or increased reliance on TBTA surplus transfers by the MTA that pressures toll rates higher
- Senior DSCRs persistently below 1.75x and total coverage levels below 1.50x as well as debt to operating revenue ratio in excess of 6 times would place downward pressure on the ratings
Legal Security
Senior lien general revenue bonds secured by a first lien on net revenues of bridges and tunnels; subordinate lien by a second lien on net revenues. The bonds do not benefit from a debt service reserve fund. There is a rate covenant that requires net revenues to be maintained at 1.25x annual debt service for senior lien debt and a strong additional bonds test that requires net revenues to be 1.40x debt service on outstanding and planned bonds if the bonds are not being issued to keep the facilities in good operating condition.
The pledge to pay principal and interest on the 2017A notes is only from proceeds of other notes, proceeds of the take out bonds, or subordinate lien revenues for the payment of interest on the notes.
Use of Proceeds
Proceeds from the General Revenue Bonds, Series 2017C-2 will be used to retire certain TBTA BANs and finance bridge and tunnel projects.
Obligor Profile
TBTA, or MTA Bridges and Tunnels, is a public benefit corporation (a corporate entity separate and apart from the state) without any power of taxation. TBTA is empowered to construct and operate toll bridges and tunnels and other public facilities in New York City. The TBTA's facilities include: Robert F. Kennedy Bridge (formerly the Triborough Bridge), Verrazano-Narrows Bridge, Bronx-Whitestone Bridge, Throgs Neck Bridge, Henry Hudson Bridge, Marine Parkway-Gil Hodges Memorial Bridge, Cross Bay Veterans Memorial Bridge, Hugh L. Carey Tunnel (formerly the Brooklyn-Battery Tunnel), and the Queens Midtown Tunnel. MTA Bridges and Tunnels receives its revenues from all tolls, rates, fees, charges, rents, proceeds of use and occupancy insurance on any portion of its tunnels, bridges and other facilities, including the net revenues of the Battery Parking Garage, and bridges and tunnels' receipts from those sources. TBTA issues debt obligations to finance the capital costs of its facilities and the transit and commuter systems operated by other affiliates and subsidiaries of the Metropolitan Transportation Authority or MTA. TBTA's surplus amounts are used to fund transit and comuter operations and finance capital projects.
Methodology
The principal methodology used in the long-term rating was Government Owned Toll Roads published in November 2016. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.
Regulatory Disclosures
For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
Kurt Krummenacker
Lead Analyst
Project Finance
Moody's Investors Service, Inc.
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Michael Mulvaney
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Releasing Office:
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No Related Data.
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