Fitch Ratings last week changed its outlook on the New Jersey Turnpike Authority to stable from negative, citing recently approved toll increases that will help liquidity and fund needed capital improvements.

Fitch assigns its A rating to the turnpike. Moody’s Investors Service and Standard & Poor’s rate it A3 and A, respectively, both with a stable outlook. The NJTA has approximately $4.8 billion of outstanding debt.

Turnpike officials approved boosting tolls on Dec. 1 and again in 2012 on the New Jersey Turnpike and the Garden State Parkway in order to raise the authority’s debt service levels to 1.4 times. That coverage would have dropped below 1.2 times without additional toll revenue. Under bond agreements, the turnpike must maintain debt service levels of 1.2 times or higher.

“Fitch estimates a debt service coverage ratio of 1.6 times to 1.7 times with coverage gradually decreasing over time,” according the rating report. “Fitch’s A rating incorporates the authority’s representations that it will manage its finances to maintain at least 1.4 times debt service coverage. In Fitch’s view, meaningful additional toll increases may be necessary after the planned 2012 increase to maintain this level of flexibility.”

Along with debt service costs, the added toll revenue will help finance a $7 billion, 10-year capital plan that includes road widening, bridge upgrades, and other infrastructure improvements.

Included in the $7 billion capital plan is a $1.25 billion contribution towards a new passenger rail tunnel that will run from Newark to Manhattan’s Pennsylvania Station under the Hudson River. Construction will begin in spring 2009 and officials expect to begin running commuter trains through the tunnel in 2017.

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