NEW YORK - Fitch Ratings said it assigned a AA rating to Southeastern Pennsylvania Transportation Authority (SEPTA, the authority) $240 million revenue refunding revenue bonds series of 2010, and upgraded $327 million in outstanding revenue bonds to AA from A-plus.
The rating outlook is stable.
The bonds are expected to price the week of Sept. 20, 2010.
The upgrade reflects sustained solid debt service coverage provided by a diverse set of pledged revenues and enhanced bondholder protection resulting from the legislative closure of the lien.
Bonds are secured by several statewide taxes and fees dedicated for mass transit and deposited in the Public Transportation Assistance Fund (PTAF) including: 0.947% of the Commonwealth of Pennsylvania's (the Commonwealth) sales and use tax revenues, receipts from a 3% vehicle lease tax, revenues from a $2.00 daily motor vehicle rental surcharge, and monies generated by a $1.00 new tire fee imposed on the sale of all new tires in the Commonwealth.
Although the pledged revenues are sensitive to economic cycles, coverage of maximum annual debt service (MADS) has remained solid at approximately 3.35 times (x) in fiscal 2010. Including the current issuance, projected MADS coverage remains healthy at roughly 2.75x even with no projected growth in the dedicated revenues from the fiscal 2010 level.
SEPTA serves a vital component of the state's economy and provides an essential service to nearly four million residents in the Philadelphia metropolitan area, although its operating environment is strained and there is a funding gap in the Commonwealth's Public Transportation Trust Fund (PTTF).
