Moody's Investors Service said it has upgraded to A2 from A3 the New Jersey Turnpike Authority's (NJTA) revenue bonds.
The rating outlook is stable.
The upgrade is based on Moody's expectation that the NJTA will continue to deliver the 2009 to 2018 capital program projects on time and within budget, debt service coverage projections will remain above 1.40 times for senior and 1.10 times according to Moody's debt service coverage ratio (DSCR) calculation including state payments, adherence to board-set financial policies, and a limitation on the amount contributed to the state through funding agreements.
The upgrade also recognizes the approval of agreements with the state that reduce NJTA contributions to the state compared to the previous five-year agreement, according to the rating agency.
The A2 rating also reflects inelastic demand for the authority's toll roads despite large rate increases, the economic recession and weather events (Hurricane Sandy) as well as a very strong market position as part of the northeast's primary road network with revenues from the two major highway arteries through the state of New Jersey (A2, negative outlook).
