WASHINGTON Fitch Ratings upgraded to BBB from BBB-minus its rating on approximately $707 million of outstanding taxable debt Friday that was issued by the private owners of the Dulles Greenway toll road in Virginia, citing the highways higher-than-expected traffic and revenue growth.
The new rating, which carries a stable outlook, applies to $390.6 million of senior zero-coupon bonds that were privately placed earlier this month, and to $317.1 million of insured project revenue bonds sold in 1999.
MBIA Insurance Corp. insures the series 1999A and 1999B bonds.
The irony is that this is a credit that was in default 10 years ago, Cherian George, a senior director at Fitch, said Friday. However, since then, the credit has stabilized, George said.
Fitch said the upgrade reflects the strength of the Loudoun County, Va., service area, which is a western suburb of Washington, D.C., and its potential for continued growth. The toll highways traffic and revenue growth have exceeded levels forecasted in 1999 at the time the former bank loan was restructured following a default. Strong growth is expected to continue because traffic congestion in the region continues to grow, and because drivers who use the Greenway save time doing so.
Taxable bond issuance for highways is an option that is being looked to with more interest by cash-strapped governments that want to build new roads, George said.
Moodys Investors Service rates the Dulles Greenways outstanding debt Baa3 which is the lowest investment grade rating offered by the agency with a stable outlook. Standard & Poors did not rate the transaction.
The Greenway, a 14-mile toll road that connects Washington Dulles International Airport to Leesburg, Va., opened for business in 1995. It is owned by Toll Road Investors Partnership II, a Virginia limited partnership formed in 1993, that also issued the taxable non-municipal bonds.
