U.S. Toll Roads Improved Their Finances in 2014: Moody's

U.S. toll roads rated by Moody's Investors Service improved their finances in fiscal year 2014, the rating agency said.

Moody's rates the debt of 44 U.S. toll roads, according to the authors of the report, "Traffic and Revenue Growth Support Improved Metrics." Of these, 39 are established and five are start-ups, according to senior vice president Maria Matesanz, vice president Kurt Krummenacker, and managing director Chee Mee Hu.

The median fiscal debt-service coverage ratio strengthened to 1.82 times in fiscal 2014 from 1.79 times in fiscal 2013.

While median liquidity declined in fiscal 2014 to 847 days cash on hand from 952 days in fiscal 2013, the Moody's analysts still considered it strong.

Median toll revenue grew 5.6% in fiscal 2014, compared to 4.1% in fiscal 2013. Median revenue expanded 4.1% in fiscal 2014.

The toll revenue increase was partially caused by an increase in number of transactions, which grew 2.8% in 2014 compared to 0.6% in 2013.

The fiscal years looked at in this report varied, with many starting on July 1, while some started on Jan. 1 or other dates.

The Moody's analysts said that the issuers' rising debt levels are their key risk. Debt increased by 3.5% in fiscal 2014. "As traditional federal funding of transportation diminishes, we expect that state and local government will continue to exert pressure on toll agencies to generate excess cash flow to pay for new projects or to subsidize non-toll-road-related capital and operating needs."

However, Moody's has a stable outlook on the sector in 2015. Its median bond rating for U.S. toll roads is A2.

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