Fitch Ratings revised the outlook on two series of sales tax revenue bonds issued by the San Francisco Bay Area Rapid Transit District to stable from negative and affirmed that rating at AA-minus, a move that comes as the agency continues to navigate persistent ridership and fiscal challenges.
The agency affirmed the outlook and
BART
The outlook revision applies to BART's junior sales tax revenue bonds, series 2024-A and 2024-B, which are structured as a Transportation Infrastructure Finance and Innovation Act (TIFIA) loans. This change effectively removes these specific bonds from "under criteria observation."
While the outlook shift offers a degree of stabilization for the TIFIA loan bonds, BART remains under financial pressure, Fitch said.
Fitch continues to affirm the agency's issuer default rating and sales tax revenue bonds at AA with negative outlooks, while its general obligation bonds hold a AAA rating with a stable outlook. Fitch noted the negative outlook for the issuer default rating and certain sales tax bonds is tied to the district's ongoing reliance on non-recurring operating support and lingering uncertainty regarding its ability to execute measures to close budget gaps.
The agency explained that these proposed fiscal measures "may include significant service cuts pending the outcome of a voter-approved regional sales tax measure in November 2026." Fitch further highlighted that these ongoing fiscal factors "also support the negative outlook."
BART has been one of the transit systems hit hardest by ridership declines following the COVID-19 pandemic, with remote and hybrid work trends lingering longer in the Bay Area than in other regions.
Fitch is actively monitoring BART's financial trajectory, noting, several factors could lead to a downgrade of the issuer default rating or general obligation bonds. These include a failure to address the operating budget gap, which could result in an actual or expected reduction in net working capital to below 25% of operating and non-operating expenses, or a significantly diminished revenue capacity from a prolonged ridership slump.
Conversely, Fitch stated, factors which could lead to a positive rating action or upgrade for the issuer default rating and general obligation bonds include the "approval of additional sales tax revenues or other budget actions that address BART's operating budget gap, which could remove the negative outlook," as well as improved demographic and economic metrics.
BART's fiscal path remains precarious as it balances essential capital maintenance requirements with a challenging revenue environment, Fitch said. The agency has said it
