Moody’s Investors Service on Friday placed a negative outlook on the Metropolitan Atlanta Rapid Transit Authority’s long-term rated debt.
The outlook change affects around $1.6 billion of outstanding sales tax bonds under three indentures.
Moody’s affirmed the Aa2 rating on the first- and second-indenture revenue bonds. The rating on the third-indenture bonds was downgraded to Aa3 from Aa2 due to weakened debt-service coverage caused by a sharp decline in sales tax revenue. The bonds are also the last to be paid from available revenue.
The negative outlook reflects MARTA’s narrowed liquidity position compared to potential calls on the use of reserves; its projections that, without a revenue increase, it will use all its reserves for operations over the next three years; and additional service cuts or increased fares, a Moody’s report said.
Analysts said potential negatives include interest rate risk on variable-rate securities, basis risk on swaps, liquidity agreement renewal risk, and risk associated with lease-in, lease-out and sale-in, lease-out agreements.