Moody’s Investors Service Thursday upgraded the Port Authority of New York and New Jersey to Aa2 with a stable outlook from Aa3, citing its favorable financial results in tough economic times. The upgrade affects $12.4 billion of outstanding debt.

“The rating addresses the fundamental strength of the issuer, its assets and how well they’ve performed over the past year and a half,” said Moody’s analyst Chee Mee Hu. “This has been something we’ve been looking at ever since the downturn started and it really has to do more with having a deeper understanding of the value of the assets ... and how it performs even in a pretty tough situation.”

In a ratings report, Moody’s said the upgrade was based on the “authority’s near monopoly over critical transportation infrastructure in the densely populated and critical New York metropolitan region” as well as its financial performance. The agency has maintained a 3.95 times debt service coverage and built up reserves even in the weakened economy, Moody’s said. Moody’s also noted as a positive the Port Authority’s willingness to use its independent rate-setting authority.

Challenges include the impact of the economic slowdown and the cost and complexity of its capital plan, which includes long-delayed development at the World Trade Center site.

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