Standard & Poor's Ratings Services raised its long-term rating to 'AA-' from 'A+' on Southeastern Pennsylvania Transportation Authority's (SEPTA) series 2011 capital grant receipts bonds. The outlook is stable.
"The raised rating is driven by our view of the authority's multi-year track record of very strong maximum annual debt service coverage," said Standard & Poor's credit analyst Andrew Bredeson. "The rating is further supported by our view of the authority's lack of additional debt plans, and level debt service requirements throughout the life of the bonds, which amortize through 2029," Mr. Bredeson added.
SEPTA operates regional transportation facilities in the city of Philadelphia and surrounding counties, including urban and commuter transit systems, rail, subway, light rail, trolley, and bus lines), serving an average of over 1 million passengers every weekday.
SEPTA is one of five recipients of Section 5337 grant revenue in the federally designated Philadelphia Urbanized Area (PUA). SEPTA has historically received approximately 85% of total Section 5337 grant revenue disbursed within the PUA. The authority's grant revenue has increased steadily since the late 1990s, from about $68 million in 1998 to roughly $100 million in 2014. The authority has demonstrated a track record of very strong pro forma MADS coverage, based on its Section 5337 funds obligation authority. Pro forma MADS coverage rose from an already strong 5.0x in 2010 to a very strong 5.9x in 2015. The authority's very strong coverage metrics constitute a primary credit strength supporting the rating, in our view.
