BRADENTON, Fla. - Moody's Investors Service changed the outlook to positive ahead of a $225.8 million Florida Department of Transportation deal for turnpike improvements.
The outlook change from stable came April 23 as Moody's affirmed its Aa3 rating on $2.8 billion in outstanding parity debt.
The positive outlook could place the agency in line for a rating upgrade as plans are made for the issuance of more than $700 million in bonds over the next five years, and potentially more debt through 2024.
"The positive outlook reflects Moody's view that the turnpike's fundamental strengths and improving Florida economic outlook coupled with a new tolling policy will support strong financial metrics and maintenance of strong liquidity going forward," said analyst Maria Matesanz.
"The turnpike's prudent fiscal policies and rational capital planning practices continue to sustain the turnpike's long track record of healthy financial operations, despite the planned issuance of an additional $777 million in debt to support the $4.7 billion capital improvement program through fiscal 2020," she said.
The senior debt service coverage ratios are forecast to remain above 2 times for senior bonds except for fiscal 2016 when there is a spike in subordinate debt service. The coverage ratios include all planned debt issues, including $777 million to fund the five-year work program as well as the potential issuance of another $923 million between 2021 and 2024, Moody's said.
The forecast also factors in the new tolling policy that ties electronic toll rates increases to the consumer price index.
Moody's said its Aa3 rating and positive outlook reflect the turnpike as an established multi-asset, statewide system with a long history of effective tolling operations and financial, and asset management. The turnpike's large service area includes the most populous and economically important employment centers in the state.
"Moody's expects the geographic and economic diversity of the turnpike's service area will continue to support long-term traffic and revenue growth during future economic slowdowns, as demonstrated by its resiliency after the recent severe economic downturn," Matesanz said.
The upcoming bond issuance will support financing several major toll road projects. Some $74.6 million will refund 2005A bonds for net present value savings of about $11.3 million or more than 15% of refunded bonds, according to Moody's.
Fitch Ratings assigned an AA-minus rating and stable outlook to deal.
Some 1.8 million motorists use portions of the 461-mile-long turnpike system each day.