DALLAS — Fitch Ratings revised its outlook on Colorado's E-470 Public Highway Authority's BBB-minus rating to positive.
The action affects $1.6 billion of outstanding senior-lien revenue bonds used to finance the 47-mile high-speed tollway that arcs the eastern and northern outskirts of the Denver metro area.
"Traffic continues to outperform Fitch's base case assumptions — up a combined 20.3% since 2009 — and management has taken strides to reduce its original sharply escalating debt service profile and to manage expenses," according to Fitch analysts Jeffrey Lack and Chad Lewis.
"As a result, coverage rebounded to pre-recession levels (1.48x in fiscal year 2013) and management currently anticipates the debt service coverage ratio to remain over 1.50x in the near-to-medium term," they added in their June 13 report.
Fitch noted that the authority has no plans to issue new debt and enjoys a strong liquidity position that provides significant cushion against unforeseen events.
"Successful implementation of the authority's debt management plan along with sustained traffic growth and expense management would likely lead to upward rating migration," the analysts said.
Traffic on E-470 grew for a fourth straight year in 2013, rising above its pre-recession level to a new peak of approximately 58.4 million transactions, according to Fitch.
Year-to-date transactions are up nearly 13% through four months.
"This growth has been despite annual and substantial toll increases, reflecting relatively inelastic demand," the analysts said. "As a result, net toll revenue for 2013 grew 10.7% to $129.2 million from $116.7 million in 2012."
The first segment of E-470 opened in 1991 southeast of Denver. The final segment opened north of Denver in 2003.
On Jan. 22, Moody's Investors Service affirmed its Baa2 rating on the authority's debt with a stable outlook. Analysts pointed to the authority's strong liquidity and a rapidly improving economy in the Denver metro area in affirming the rating.
