DALLAS - Fitch Ratings yesterday downgraded the North Texas Tollway Authority to BBB-plus from A-minus as the authority prepares to issue $2.3 billion of revenue bonds for a controversial State Highway 121 tollway north of Dallas.

Fitch at the same time said it was withdrawing the rating, which will not apply to the new bonds, at the request of the NTTA.

The authority had premised its plans for financing the highway on maintaining an A-category rating. In anticipation of the NTTA's increase in borrowing, Standard & Poor's already had lowered its rating for the credit one notch to A-minus. Moody's Investors Service has maintained an A2 rating.

"These ratings are consistent with our expectations and indicative of the NTTA system's financial strength and stability," NTTA board chairman Paul N. Wageman said of the two A-category ratings last week. "We have a sound financial plan to permanently finance SH 121, a truly superior project."

Susan A. Buse, director of finance for the authority, said yesterday that the authority remains confident about its ability to finance the project. The Fitch downgrade, which only applies to previously issued debt, "really doesn't mean anything for the upcoming issue, given the A-category ratings from Moody's and [Standard & Poor's]," she said.

Buse said the NTTA asked Fitch to withdraw its rating when it could not promise to have a rating ready for the issuance last year of $3.2 billion of bond anticipation notes by the authority for costs associated with the SH 121 project.

The NTTA also questioned Fitch's statement about the maintenance and operations cost increases, saying the engineers arrived at the 2.75% annual rise based on their research.

Fitch analysts cited "significant risk" associated with the new project as the NTTA embarks on an aggressive construction binge that will more than triple its existing debt.

"The financing for SH 121 represented a significant departure from NTTA's approach to project financing and delivery," Fitch noted. "It is expected that the NTTA's debt burden, which was estimated by Fitch to grow to about $2.5 billion in the near term will triple with near certainty to about $7.5 billion in the next few years. With the assumption of other projects, the debt load will increase further."

The NTTA board last week approved about $5 billion of bonds for SH 121. The first $2.3 billion of revenue bonds expected to go to market in March will take out a portion of the $3.2 billion of bond anticipation notes issued last year.

The Bans provided a $3.2 billion concession payment to the Regional Transportation Council for the right to build SH 121. The project was originally awarded to the private development team of Cintra-JPMorgan, a combination of the investment banker and Spanish developer Cintra. At the time the project was taken from Cintra and awarded to the NTTA last year, some government leaders questioned the authority's ability to handle so much debt while continuing to build other toll projects in the region.

The NTTA is expected to issue approximately $1.6 billion of callable current interest bonds, $150 million of non-callable capital appreciation bonds, $500 million of put bonds, and $19.1 million of taxable current interest bonds.

The NTTA's debt on the SH 121 project would be secured by all the toll revenues in the system, which could force a toll increase. The agency has adopted a schedule of toll increases based on projected debt service needs.

The authority must also guard against further slippage in its ratings under a 2005 swap agreement with Bear, Stearns & Co., Moody's notes. If ratings fall below the A category, the NTTA must put up about $69 million of collateral under the agreement.

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