Wednesday, February 3, 2010

By Ted Phillips

Print Email Reprints

NEW YORK - Moody’s Investors Service today will downgrade New York’s Metropolitan Transportation Authority’s revenue bonds to A3 from A2, MTA spokesman Jeremy Soffin said.

Moody’s analyst Nicole Johnson confirmed the downgrade, but the report has not yet been issued.

The downgrade comes as the MTA reports, in a supplemental offering document for the bonds it is scheduled to sell today, that the state Division of Budget has informed it that revenue from a payroll tax will be $350 million lower in 2010 than projected.

The MTA is scheduled to be in the market today with $650 million of bonds on its transportation revenue credit. A retail order period was scheduled yesterday. Barclays Capital is the lead manager on the deal.

The payroll tax, known as a “mobility tax,” is levied on employers in the 12 counties served by the MTA. The tax was imposed last year as part of a bailout package and had been expected to bring in $1.54 billion in 2010.

In August, Moody’s took the authority’s transportation revenue bonds off its watch list for downgrade, where it had been since March, and affirmed its stable outlook. On Friday, Moody’s assigned a negative outlook to the credit.

The MTA has $12.24 billion of outstanding debt on its transportation revenue credit, out of $28.62 billion of total bonds outstanding, according to its Web site.