Fitch Ratings has affirmed its AA rating and stable outlook on the Ohio Turnpike Commission ahead of an expected announcement by Gov. John Kasich of his plans to privatize the 241-mile toll road.
The commission has $566.2 million of outstanding general revenue bonds, which would likely need to be defeased in the case of a privatization.
The Turnpike is a “key East-West Interstate connector” that benefits from limited competition, stable traffic flow, and unlimited toll rate-setting authority, according to Fitch.
The Turnpike also enjoys falling debt-service levels over the next 19 years and a modest five-year capital plan, analysts said.
“The Turnpike’s flat to declining debt-service profile means that barring a significant drop in volume or cost increases, coverage should remain above [two times] for at least the next 5 years,” Fitch analysts said in a release affirming the rating.
The rating agency said it is monitoring the state’s privatization plans for the asset, which require legislative approval to advance.
Kasich, a Republican, has talked about privatizing the 241-mile Turnpike, one of Ohio’s most lucrative assets, since taking office, saying it could generate up to $2.4 billion.
It’s one of several proposed public-private partnership plans aimed at raising cash for the Buckeye State.
The governor said in early October that he expects to propose a plan for the road within the next 30 days.
KPMG LLP is advising the administration on the deal.
“Fitch will continue to monitor developments and notes that either a privatization or increased leverage for non-Turnpike projects, similar to what has occurred at the Pennsylvania Turnpike will require legislative approval,” analysts said.