U.S. toll roads are maintaining high investment-grade ratings, despite the slow economic recovery, Fitch Ratings said Thursday, releasing its first annual review of the toll roads it rates.

"Rating changes from small reductions in traffic volumes or slowing growth were tempered due to continued, albeit reduced, pricing power," Scott Zuchorski, director of Fitch's global infrastructure and project finance group, said, explaining that pricing power means the ability to raise tolls.

The rating agency said more than 60% of the toll roads it rates are rated "A" or higher and reflect the toll road sector's mostly public ownership and operations and moderate leverage and resilience, despite lower traffic volume.

Ratings have changed for more than 30% of its rated toll roads since 2007, said Fitch, but those were evenly split between upgrades or positive outlooks, and downgrades or negative outlooks.

Analysts said Fitch rates about 45 public toll roads and a handful of private toll roads that range from intrastate turnpikes, urban expressway systems and bridge systems to stand-alone toll roads, and separately tolled lanes on highways.

Fitch's analysts looked at five key drivers of its ratings for toll roads: the resiliency of traffic volume, toll rates and willingness to increase them; the toll road's capital improvement plan and its funding sources; the financial risk associated with their debt structure; and the level of financial flexibility to pay debt service.
The report showed 82% of Fitch's rated toll roads are strong or in the mid-range in terms of traffic volume and competition from other transportation options. About 88.6% were strong or in the mid-range for the ability to raise their toll rates, with 25% in the strong category.

An even higher percentage — 97.7% — were in the strong or mid-range categories with respect to their capital improvement plans and funding sources.

The report said 86.4% of the toll roads were assessed to be strong or in the mid-range in terms of minimizing the risk inherent in their debt structure and 83.1% were similarly assessed for their ability to make debt service payments.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.