Kroll Rides N.Y. Bridges and Tunnels

Kroll Bond Rating Agency is joining the bridge and tunnel crowd.

In its latest buildout move, Kroll rated about $900 million worth of bonds that the Metropolitan Transportation Authority’s Triborough Bridge and Tunnel Authority intends to sell Monday.

This marks the entry into New York City and transportation for Kroll, which earlier this year began a push into municipal finance. Kroll released the Triborough report late Thursday.

Kroll assigned a AA rating to the TBTA’s $266 million of Series 2012D general revenue refunding bonds and AA-minus rating to $638 million of Series 2012C subordinate revenue refunding bonds, with stable outlooks. Kroll also assigned AA and stable to Series 2005B-4a general revenue variable rate refunding bonds, which are part of the senior issuance.

Its ratings are slightly above that of Moody’s Investors Service, Fitch Ratings and Standard & Poor's. Moody’s assigned Aa3, Fitch and Standard & Poor's an equivalent AA-minus, respectively, on the senior lien sale and Moody's assigned A1 and the other two agencies an equivalent A-plus on the subordinate series.

“Transportation is obviously a significant part of the public finance landscape,” Kroll managing director Kate Hackett said in an interview. “It will be an interesting sector to follow in the next couple of years and analysts will need to sharpen their credit skills.”

The Triborough Bridge and Tunnel Authority operates seven bridges and two tunnels that link Manhattan with New York City’s outer boroughs. Its toll system is the largest in the United States, with total revenues that exceed $1.5 billion. It has about $6.6 billion in senior lien and $1.8 billion in subordinate revenue bonds outstanding.

The MTA absorbed TBTA — also known as MTA Bridges and Tunnels — into its system in 1968.

“Kroll does not view TBTA as existing in a silo. The path we took was to assess the financial operations of TBTA in the context of the larger MTA organization,” said Hackett. “Kroll views the statutory transfers of operating surplus to the MTA as supporting the high debt service coverage and not representing a drain of liquidity.”

Kroll and MTA officials began meeting earlier in the year. MTA finance director Patrick McCoy welcomed Kroll.

“We believe it gives a fresh perspective to the TBTA credit, which has always been the MTA’s highest rated credit,” McCoy said Friday. “The rating from a fourth agency provides the investment community with deeper insight into the Triborough credit and its relationship with the MTA, and we believe this will have a positive effect on the reception of TBTA bonds in the primary and secondary markets.”

Moody’s in May downgraded Triborough’s senior and subordinate lien bonds.

Jules Kroll, noted for pursuing hidden assets linked to dictators Saddam Hussein and Jean-Claude Duvalier, founded Kroll Bond Rating Agency in 2010. He sold his original firm, Kroll Associates and later, Kroll Inc., to Marsh & McLennan Cos. in 2004.

Also this week, Kroll assigned a long-term rating of AA-minus on the New York State Housing Finance Agency’s $35 million issuance of Series 2012 Dock Street housing revenue bonds.

Kroll issued rankings earlier this year on Connecticut and its fifth-largest city, Waterbury. Other Kroll public finance ratings have included Orange County, Fla., and some Pennsylvania townships and boroughs.

Jefferies & Co. is lead manager for the Triborough bond sale, while Lamont Financial Services Corp. is the financial advisor. Nixon Peabody LLP is bond counsel.

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Transportation industry New York
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