Standard & Poor’s downgraded the New York State Thruway Authority’s general revenue bonds to A from A-plus Tuesday.
S&P has a stable outlook on the new rating.
In January the authority approved a design-build agreement to build a replacement for the Tappan Zee bridge, which is about 20 miles north of New York City. The authority expects the bridge to take six years to replace and cost $3.9 billion.
S&P analysts Joseph Pezzimenti and Peter Murphy expect that the building of the bridge will require the authority take on a significant amount of debt. Another factor in the downgrade is the analysts’ expectation that the authority will depend on rate increases to maintain margins.
On the plus side, the authority’s system is essential to state transportation and serves the majority of the state’s residents, the analysts said. The authority maintains generally strong debt service coverage, at 1.61 times based on 2013 budgeted figures.
The authority also has competitive tolls relative to other regional authorities, providing rate-setting flexibility.