New York, October 06, 2016 -- Issue: General Revenue Variable Rate Refunding Bonds, Subseries 2005B-4a (Floating Rate Tender Notes); Rating: Aa3; Rating Type: Underlying LT; Sale Amount: $27,000,000; Expected Sale Date: 10/17/2016; Rating Description: Revenue: Government Enterprise;
Issue: General Revenue Variable Rate Refunding Bonds, Subseries 2005B-4b (Floating Rate Tender Notes); Rating: Aa3; Rating Type: Underlying LT; Sale Amount: $37,500,000; Expected Sale Date: 10/17/2016; Rating Description: Revenue: Government Enterprise;
Issue: General Revenue Variable Rate Refunding Bonds, Subseries 2005B-4e (Floating Rate Tender Notes); Rating: Aa3; Rating Type: Underlying LT; Sale Amount: $45,200,000; Expected Sale Date: 10/17/2016; Rating Description: Revenue: Government Enterprise;
Summary Rating Rationale
Moody's Investor's Service has assigned a Aa3 to the Triborough Bridge and Tunnel Authority's (TBTA) General Revenue Variable Rate Refunding Bonds, Subseries 2005B-4a ($27.0 million), Subseries 2005B-4b($37.5 million), and Subseries 2005B-4e ($45.2 million). Moody's has also affirmed the Aa3 rating on the TBTA's parity outstanding general revenue bonds totaling approximately $7.12 billion and the A1 rating on the subordinate lien general revenue bonds totaling $1.66 billion. We have also affirmed the VMIG1 ratings on the Series 2005B-4a bonds. 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 both among the strongest of all toll road facilities. These strengths are tempered by the bond 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 currently forecasted debt service coverage ratios (DSCRs); however, the TBTA has historically managed its capital needs with reasonable and timely toll rate increases.
The VMIG 1 short-term rating on the currently outstanding Series 2005B-4a bonds are based on the ability of the authority to provide short term liquidity in the event of a failed remarketing either through a bank supported letter of credit or standby bond purchase agreement or, in some cases the issuer's own cash flow and liquidity. The remarketed 2005B-4a bonds will not carry a short-term rating.
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 2017 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 1.75 times board adopted target and total DSCRs at or above 1.50 times.
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 1.75 times and total coverage levels below 1.50 times as well as debt to operating revenue ratios in excess of 6 times would place downward pressure on the ratings
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 1.40 times debt service on outstanding and planned bonds if the bonds are not being issued to keep the facilities in good operating condition.
Use of Proceeds
The General Revenue Variable Rate Refunding Bonds, Subseries 2005B-4a, General Revenue Variable Rate Refunding Bonds, Subseries 2005B-4b and General Revenue Variable Rate Refunding Bonds, Subseries 2005B-4e are being remarketed on their planned mandatory tender dates as floating rate notes with mandatory tenders expected from three to five years after the remarketing date. The issuer will determine the final tender date depending on market conditions at the time of sale.
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 commuter operations and finance capital projects.
The principal methodology used in this rating was Government Owned Toll Roads published in October 2012. The additional methodology used in the short term rating was Variable Rate Instruments Supported by Conditional Liquidity Facilities published in March 2015. Please see the Rating Methodologies page on www.moodys.com for a copy of these methodologies.
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