NY MTA gets another warning shot from Kroll

New York’s Metropolitan Transportation Authority received another warning shot from Kroll Bond Rating Agency on two of its credits.

Kroll late Tuesday placed its long-term AA rating on the MTA’s Triborough Bridge and Tunnel Authority general revenue bonds and AA-minus rating on subordinate revenue bonds’ ratings on watch-downgrade, reflecting the significant decline in toll revenue caused by the COVID-19 crisis.

Based on MTA’s March 25 disclosure statement supplement, which Kroll referenced, toll traffic for the MTA Bridges and Tunnels, the operating name for TBTA, declined by 59.93%, one day after Gov. Andrew Cuomo issued a “New York State on Pause” executive order.

Bloomberg News

“The watch downgrade reflects the uncertainty regarding the magnitude and tenor of the impact on toll revenues due to the evolving nature of the COVID-19 crisis," Kroll said. “While there is a high likelihood of substantial recovery of traffic on the TBTA’s tolled bridges and tunnels, the timing and velocity of this recovery is unclear.”

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A pledge of net revenues of the TBTA secures the bonds. The TBTA, which operates New York City’s interborough bridges and tunnels, is a unit of the state-run MTA, which runs the city’s subways and bus system.

Wall Street has hit the MTA with a series of rating actions over the past two weeks, including a March 25 downgrade by S&P Global Ratings to its issuer rating to A-minus from A. Kroll, Moody’s Investors Service and Fitch Ratings have also issued review-for-downgrade advisories.

Kroll on March 24 placed on watch downgrade its AA-plus ratings on the MTA’s transportation revenue bonds, including Series 2020C that the authority is expected to issue to retire transportation bond anticipation notes, Subseries 2018B-1 and Subseries 2019B-2, maturing on May 15.

According to data on the Municipal Securities Rulemaking Board's EMMA website, a block of Series 2012C transportation revenue bonds maturing in 2042 that originally priced at 111.425 cents on the dollar and a 5% coupon sold to a customer late Tuesday at a price of 103.486 cents and a yield of 3.592%.

Ridership is down about 90% year-over-year since the start of the pandemic, MTA Chairman Patrick Foye said Tuesday. Foye, who has tested positive for the coronavirus, is working at home.

As of Tuesday, eight MTA employees have died and 582 have tested positive for the virus.

Speaking at the March 25 board meeting, MTA Chief Financial Officer Robert Foran said the authority is losing $125 million per week compared with its 2020 budget and financial plan. Total revenue loss, he said, could exceed $6.5 billion. Even with a 100% rebound after current ridership levels continue for six months, the authority would still lose nearly $5 billion.

The MTA's board authorized its finance department to issue an additional $2 billion in revenue anticipation notes. The authority drew down on its existing $1 billion credit facility last week.

The existing liquidity program of $1 billion had consisted of two revolving credit agreements: $800 million with JPMorgan Chase Bank NA; and $200 million with Bank of America NA.

According to Finance Director Patrick McCoy, MTA finance staff MTA is in discussions with JPMorgan to increase its capacity in an amount the bank has yet to determine. Bank of America, McCoy said, has agreed to increase its available commitment to $410 million from $200 million.