The privatization of the Ohio Turnpike would likely be a positive for debt holders, Moody’s Investors Service said in a market comment this week.
The comment comes a week after Ohio Department of Transportation officials announced the selection of KPMG as advisor to evaluate the potential privatization of the 241-mile toll road.
A privatization would require the Turnpike Commission to defease $600 million of toll bonds with Treasuries, which would be a credit positive, Moody’s said. It remains to be seen whether that would be a positive for the state, however.
“State governments’ interest in privatizing crown jewel infrastructure assets has been a growing trend for years,” Moody’s analysts said. “But the benefit of a one-time cash infusion for road and highway capital improvements is partly offset by the often politically unpopular decision to relinquish control of critical infrastructure assets.”
Moody’s noted that states have had varying degrees of success with toll-road privatizations. Indiana and Illinois led successful transactions, but in New Jersey, voters resisted such a plan.
In 2008, the Pennsylvania Legislature defeated a privatization in favor of a public concession between the state Department of Transportation and the Pennsylvania Turnpike.