Moody's Investors Service said it expects that the Triborough Bridge and Tunnel Authority (TBTA) should be able to absorb revenue losses sustained by the facilities that closed due to the impact of Hurricane Sandy, though already low liquidity could be further reduced.

Key revenue generating facilities are open and collecting revenues. The facilities that were closed include the Queens Midtown Tunnel and the Hugh L. Carey Tunnel (formerly the Brooklyn Battery Tunnel), which together account for roughly 17% of operating revenues.

Combined with two other smaller bridges that were closed (Cross Bay Veterans Memorial Bridge and Marine Parkway-Gil Hodges Memorial Bridge) the closed facilities account for about 18.5% of total operating revenues.

The two bridges closed during the storm are now open. The Queens Midtown Tunnel, which accounts for 11% of revenues, is currently open for buses during rush hour and is expected to be fully open with the next several days. TBTA is still working to re-open the Hugh Carey Tunnel, which accounts for 6% of revenues.

With debt service coverage ratios (DSCR) of 2.5 times for senior bonds and 1.9 times for all bonds in FY 2011, we estimate that operating revenues would have to fall by nearly 50 percent for a year to breach coverage covenants. For FY 2012 DSCR is forecasted to be slightly lower at 2.4 for senior bonds and 1.8 for all bonds. Liquidity was relatively low at 226 days cash on hand in FY 2011, but cash flow is strong with 94% revenue generating facilities open as of yesterday.

The authority has independent rate setting authority and a two-tiered rate covenant. The first test requires rates sufficient to cover operating expenses and all debt service requirements for the senior bonds and any subordinate debt. The second test requires net revenues sufficient to provide 1.25 times coverage of the senior bonds and at least sufficient to maintain any reserve established in the senior resolution as determined by the authority, or 1.10 times debt service on senior and subordinate bonds. Rate increases could be implemented by the Metropolitan Transportation Authority (MTA) board within 6 months.

Going forward Moody's will focus on assessing the authority's Sandy-related repair costs and how these costs will be funded as the authority awaits reimbursements from its insurers and FEMA. Also Moody's will evaluate the impact of these additional costs on DSCRs and liquidity.

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