Moody's Investors Service yesterday upgraded the Port Authority of New York and New Jersey's $9.35 billion of consolidated bonds to Aa3 from A1 and upgraded the authority's $505.6 million of versatile structure bonds to A1 from A2.
The rating changes come as the Port Authority is planning a $700 million consolidated bond transaction, set to price this month, with half of the debt to be taxable and the other half subject to the alternative minimum tax. Moody's assigns its global-scale rating of Aa1 to the taxable portion of the sale.
The two tax-exempt ratings boosts are based on sold financial performance, growing reserve balances, and the authority's strong regional presence. Moody's describe's the authority's position as a "near monopoly" in the region for transportation.
Passenger growth at its three commercial airports, John F. Kennedy, LaGuardia, and Newark airports, surpassed expectations in fiscal 2007 with 109 million passengers compared to earlier projections of 107.6 million. Audited 2007 financial documents indicate a 5% increase in gross operating revenues over the prior year and debt service coverage on the consolidated bonds grew to 3.29 times in fiscal 2007 compared to 2.31 times the year before, according to a Moody's press release.
Recent increases in tolls and fares earlier this month will help boost the Port Authority's revenues, with cars now paying $8, up from $6, for tolls on the authority's tunnels and bridges. In addition, riders on the PATH train, a commuter line that connects Manhattan to New Jersey, now pay $1.75, up by 25 cents.
Fitch Ratings and Standard & Poor's rate the Port Authority AA-minus.
