SAN FRANCISCO - The Bay Area Toll Authority, Calif. is planning to sell $814 million of revenue bonds in December to finish its Toll Bridge Seismic Retrofit Program and refund outstanding debt.
The deal will include around $513.6 million of senior toll bridge revenue refunding bonds and $300 million of subordinate lien bonds.
Moody's Investors Service assigned the senior revenue bonds a Aa3 rating and Fitch Ratings assigned an equivalent AA-minus rating.
On the subordinate lien bonds, Moody's assigned a A1 rating. Fitch does not rate the subordinate bonds.
Both agencies give stable outlooks on their ratings.
"The AA-minus rating reflects BATA's continued significant progress associated with their seismic retrofit capital investment program, which is now largely complete," Fitch analyst Daniel Adelman said in a report. "It also reflects stable traffic and revenue performance on the authority's asset base following a period of significant toll increases, with no more planned in the foreseeable future."
BATA administers tolls on the Bay Area's seven state-owned toll bridges.
Both rating agencies noted the authority's near monopoly over bridge crossings in the Bay Area, as well as strong service area demand for the seven bridges.
With 95% of the program complete, construction risk has been largely mitigated and the project reserve of $89.5 million is sufficient to cover remaining costs, analysts said.
The authority's management of its escalating debt service will be the largest risk to its credit strength, according to Moody's. The agency said BATA's total amount of debt is the highest among rated established toll roads.
The authority maintains a complicated debt structure, which includes over $2.7 billion in variable rate debt partly hedged with traditional floating-fixed interest rate swaps.
With the new bonds, the authority will have $5.65 billion of senior and $3.69 billion of subordinate lien bonds outstanding.