DALLAS - Texas' Harris County Toll Road Authority has earned a one-notch Moody's Investors Service upgrade to Aa2 on $1.8 billion of senior revenue bonds based on strong traffic growth and improving debt service coverage.
"Another credit positive is management's stated goal of keeping leverage below five times gross operating revenues and limiting transfers to the county for non-toll road projects to the current $120 million a year," lead analyst Maria Matesanz wrote in the Oct. 6 report.
Moody's had maintained a positive outlook on HCTRA since July 2014. With the upgrade, the outlook returns to stable.
"The outlook for the senior lien revenue bonds is stable based on continued strong growth in traffic due to service area expansion combined with expected annual toll rate adjustments and limited planned debt for capital projects," Matesanz wrote. "Moody's expects that traffic growth and toll revenues will continue to produce strong DSCRs on a net basis while the toll road system generates and maintains ample cash margins and maintains its assets in good condition."
The upgrade is good news for Houston and Harris County as oil prices threaten to weaken the economy of the nation's energy hub. Offsetting the county's energy doldrums is in increased economic diversity, analysts said.
"A growing and increasingly diverse service area economy is highly dependent on HCTRA's network for commuting and annually indexed toll rate increases," Matesanz said.
The Harris County Toll Road Authority system consists of approximately 120 miles of roadway in the Houston-Harris County metropolitan area. The HCTRA system connects with 12 miles of toll roads in Fort Bend County, for a total of 132 miles.
"We note that the county expects to fund projects primarily with its sizable excess cash flow, though bonds may be issued for larger projects, such as the Houston Ship Channel Bridge replacement project in 2017-18," Matesanz said.
