Moody's Investors Service said it has downgraded to A3 from A2 its rating on the Rhode Island Economic Development Corporation (RIEDC) Rhode Island motor fuel tax revenue bonds (Rhode Island Department of Transportation).
The motor fuel tax bonds are secured by a statutory pledge of two cents of the state's motor vehicle fuel tax, subject to annual appropriation. The outlook on these bonds is revised to stable from negative.
The rating was downgraded to A3 from A2 because motor fuel tax collections have continued to deteriorate over a multi-year period, causing coverage of maximum annual debt service to fall below the additional bonds test.
The rating also reflects the legal provisions underlying the bonds, including an additional bonds test of 1.25 times maximum annual debt service, appropriation risk and debt service reserve and residual reserve funds each funded at one-half maximum annual debt service.
The outlook was changed to stable from negative in the expectation that motor fuel tax revenues will stabilize near the current level.