Florida's Santa Rosa Bridge Bonds Cut to CC by S&P

Standard & Poor’s lowered Florida’s Santa Rosa Bay Bridge Authority Series 1996 toll revenue bonds four notches to CC from B-minus.

The outlook is negative.

“The rating reflects our opinion of an issuer that we believe is highly vulnerable to eventual nonpayment of debt service requirements,” said analyst Adam Torres.

The authority’s toll revenues have consistently failed to meet debt service obligations, requiring repeated draws on the debt service reserve fund. “Management now projects a debt service reserve insufficiency in fiscal 2012 — well before scheduled bond maturity in 2028,” Torres said.

“Although toll revenue declined only 0.5% in fiscal 2008, we consider the traffic trends to be a major concern, given that toll rates actually increased — to $3.50 from $3.00 for passenger vehicles,” Standard & Poor’s said. “Indeed, toll transactions declined 14% in fiscal 2008 from a year earlier, while from July to November 2008, the authority recorded a 10% decline in transactions and 6% decline in revenue compared with the same period in 2007.”

An outlook revision to stable or an improved rating could occur if the authority can fully meet debt service requirements through tolls and begin to replenish the debt service reserve.

 

 

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