DALLAS — Standard & Poor's placed nearly $1 billion of certificates of participation for four transit systems on its watch list Monday based on its new ratings criteria.
Three of the transit systems — Regional Transportation District in Denver, Roaring Fork Transportation Authority in Aspen, Colo., and the Alameda-Contra Costa Transit District in the San Francisco Bay Area of California — were listed as "developing," which could mean an upgrade or no change.
The Denver-area RTD is rated A-minus, the Oakland, Calif.-headquartered AC Transit is rated A-plus, and the Roaring Fork authority is rated A-minus.
The Houston-based Metropolitan Transit Authority of Harris County's AA rating was placed on the negative watch list, meaning a downgrade is possible.
In the process of developing its new criteria, S&P conducted tests that indicate that most ratings in the mass transit sector will not change. Those that do will do so by no more than one notch in most cases, analysts said.
"We will resolve the CreditWatch listings within 90 days and will publish a full report for each rating," said analyst Paul Dyson. The action affects $664 million of certificates issued by RTD from 2004 to 2013. The longest maturity affected is for the year 2040.
Roaring Fork, which serves the Roaring Fork Valley between Glenwood Springs and Aspen, Colo., has only $3.9 million of 2005 COPs outstanding.
The Harris County MTA has $108 million of COPs issued in 2008, with final maturity in 2021.
"As a result of the application of the revised transit criteria, we do not believe the rating will be raised in the next 90 days," Dyson said of the Harris MTA certificates.
The Alameda-Contra Costa Transportation District has $29 million of COPS issued in 2007 and 2009.
On Saturday, after months of strike threats, AC Transit management and the Amalgamated Transit Union Local 192, which represents the agency's bus operators and mechanics, have agreed to terms of a new labor contract for the 1,625 bus operators and mechanics.
"This was a long and often intense negotiation and there are no winners or losers in its outcome," AC Transit General Manager David Armijo said in a statement. "We are happy we were able to get through the process without any disruption in service."
The long-term rating on RTD's $47 million of 2004A COPs insured by National Public Finance Guarantee Corp was placed on CreditWatch with positive implications because the long-term rating on the insurer provides a credit floor such that the rating could either be raised or affirmed, but not lowered, Dyson explained.
"We intend for the criteria to help market participants better understand our approach to assigning mass transit system ratings, to enhance the forward-looking nature of these ratings, and to enable better comparisons between these ratings and all other ratings," Dyson said.
The COPs report followed a Dec. 18 report on the bond ratings of nine U.S. mass transit enterprises under the new rating criteria. Those ratings and the issuer credit rating of a tenth agency were placed on the watch list.
The agencies affected by that action were: San Diego, Calif., Metropolitan Transit System; San Francisco Municipal Transportation Agency; Peninsula Corridor Joint Powers Board of California; Sacramento, Calif., Regional Transit District; Metropolitan Transportation Authority of New York; Washington Metropolitan Transit District; Corpus Christi, Tex., Regional Transportation Authority; VIA Metro Transit Authority of San Antonio; and Chicago Transit Authority.
The bonds under review are secured by gross revenue, net revenue, or farebox revenue and do not include bonds secured solely by sales tax revenue or grant revenue, according to the analysts.