Ohio Gov. John Kasich's plan to issue $1.45 billion in new bonds through the Ohio Turnpike Commission (OTC) to fund transportation projects in Northern Ohio is not expected to negatively impact the quality of existing OTC debt, according to a Fitch Ratings report.
"While the proposed bonds' credit quality will likely differ from the AA rating on the outstanding debt, Fitch views the plan as conservative, providing the turnpike with a fair amount of flexibility in the future," said Reed Singer, Director in Fitch's Global Infrastructure Group.
Gov. Kasich's announcement comes after a 10-month study evaluating different options, including privatization, which was rejected.
Ohio's decision not to lease its turnpike, as Indiana did in 2006, demonstrates that privatization concerns continue to influence policy-makers.
While Ohio's consultant report noted that a 50-year lease of the turnpike could generate $3.3 - $4 billion, Ohio chose not to privatize as the analysis included toll increases above the rate of inflation for EZ-Pass users. In the announced plan, OTC intends to limit toll increases to inflation for 10 years and then possibly increase rates by 10% every 10 years thereafter.