New York Metropolitan Transportation Authority’s transportation revenue bonds won an upgrade to A1 from A2 from Moody’s Investors Service ahead of a$478 million sale scheduled for next week.
The move affects $21.7 billion of affected long-term debt. The transportation revenue bonds are the authority’s primary credit.
The upgrade “primarily reflects trends of improvement over recent years in the MTA’s operating environment, including strong service-area economic growth and strengthened financial condition of supporting governments New York State and New York City,” Moody’s said in a report.
Friday’s announcement was a shot in the arm for the MTA, which awaits word on its proposed five-year, $32 billion capital program. A state capital program review board last October rejected it without prejudice, citing its $14 billion funding gap.
No one was available to comment on the Moody’s upgrade. After the June board meeting, Chairman Thomas Prendergast said he was “guardedly optimistic” that the authority would get its desired funding. “I’m glass-is-half-full’ person,” Prendergastsaid. He added that the MTA could receive incremental funding, such as a temporary two-year plan, as the authority received the last time.
Moody’s maintained a stable outlook, expressing confidence that the MTA and its supporting governments will continue to balance its fiscal operations and capital program while maintaining adequate infrastructure quality and reasonable leverage ratios.
Evidence of declining support, said Moody’s, could force the rating down. Moody’s also cited “very high” fixed costs for debt and labor-related expenses.
The MTA last year received two upgrades from Standard & Poor’s, from A to A-plus, then to AA-minus. Fitch Ratings assigns an A rating.
Roughly 73%, or $23.5 billion, of the proposed capital program is for basic maintenance, or state of good repair. Some of this increase reflects hardening of the system in the aftermath of the Oct. 29, 2012 Hurricane Sandy.
The MTA expects federal aid to cover about 90% of the $10.5 billion of storm recovery and resiliency projects.
