The Alameda Transportation Corridor Authority, Calif. will bring a trio of single-A-level ratings -- and an improved outlook -- to the market when it refunds $290 million in senior revenue bonds on Jan. 14.
The authority, a joint powers authority of Los Angeles and the ports of Los Angeles and Long Beach, received an A3 rating on Wednesday from Moody’s Investors Service ahead of plans on Jan. 14 to refund $290 million in senior lien revenue bonds.
The authority runs a 20-mile rail line that consolidates rail traffic between the ports of Los Angeles and Long Beach and the rail yards near downtown Los Angeles.
The $2.4 billion enterprise was constructed in the 1990s with funding from $1.2 billion of revenue bonds, $800 million from the Los Angeles County Metropolitan Transportation Authority and the ports, and a $400 million federal loan.
Moody’s also affirmed its A3 rating on existing senior lien debt and a Baa2 subordinate lien rating on a combined $2 billion in outstanding debt, but revised its outlook to stable from negative for both liens.
On Jan. 3, Fitch Ratings gave an A rating to the proposed bond refunding.
Fitch analysts gave a stable outlook to the outstanding bonds and affirmed A ratings on the authority’s outstanding senior revenue bonds and the BBB-plus rating on its subordinate revenue bonds.
Standard & Poor’s rated the outstanding senior lien bonds A-minus and subordinate lien bonds BBB-plus on Dec. 30, 2011.
Proceeds of the series 2013A bonds will refund certain callable maturities of ACTA’s 1999A senior lien bonds, according to a Fitch report.
The change to a stable outlook for senior and subordinate lien ratings reflects stabilized consolidated debt service coverage ratios due to several factors, according to the report.
Moody’s analysts said the factors affecting the improved outlook were an increase in container traffic, a debt restructuring, consistent port shortfall payments and the implementation of supplemental container charges.
The affirmation of the Baa2 subordinate lien rating reflects weaker debt service coverage ratios of 1.36 times and 0.96 times excluding the port pledge obligation and a lower priority of payment in the indenture flow of funds.
Both ratings recognized the benefits of the authority’s debt service reserve funds, partial debt service support from the Los Angeles and Long Beach ports and the essential nature of the corridor to the ports.
The authority provides an essential link between the ports and the transcontinental railroad system in the movement of freight West to East, according to analysts.
Container traffic funneled through the corridor grew 15.8% in fiscal 2010, declined 1.5% in fiscal 2012, but is projected to stabilize in 2012, the report said.
Among concerns that could provide downward rating pressure is the limited ability to raise rates and depletion of construction and operating reserves.