Standard & Poor’s last week revised the outlook to positive from stable on the New Jersey Turnpike Authority due to additional revenue from a recent toll increase that began Dec. 1.
Standard & Poor’s rates the authority’s $4.8 billion of outstanding debt A. Officials implemented toll hikes earlier this month on the turnpike and the Garden State Parkway and will increase tolls again in 2012 to help finance a $7 billion, 10-year capital plan.
In addition, the increased revenue will boost the authority’s debt service coverage to 1.4 times after it dropped to 1.2 this year. Under bond agreements, debt service coverage cannot fall below 1.2 times. Keeping debt service levels at healthy levels in the future could prompt an rating upgrade, according to analysts.
“We could raise the rating once we receive more details about the capital program and its funding sources,” Standard & Poor’s said in a report. “An upgrade would depend on the authority’s ability to sustain coverage stronger than historic levels in the long term.”
Last month, Fitch Ratings revised the turnpike’s outlook to stable from negative due to the toll hikes and affirmed its A rating. Moody’s Investors Service rates the credit A3 with a stable outlook.
The average passenger trip on the turnpike now costs $1.70, a 50-cent boost. That amount will increase by 90 cents in 2012. The average passenger trip on the parkway increased by 15 cents to 50 cents, with that average cost to reach 75 cents in 2012.
