NEW YORK - Moody's Investors Service said it has downgraded the Triborough Bridge and Tunnel Authority, N.Y.'s (TBTA) senior bonds to Aa3 from Aa2 and its subordinate lien bonds to A1 from Aa3. The rating outlook is stable.

Separately, Moody's assigned a Aa3 rating to the TBTA's Series 2012A general revenue refunding bonds.

The downgrade reflects lingering uncertainty regarding the regional economic recovery, low liquidity levels and lack of a debt service reserve fund (DSRF), though monthly deposits to debt service accounts help ensure bondholder protections.

The Aa3 rating also reflects the TBTA's close association with the Metropolitan Transportation Authority (MTA rated A2), where TBTA is required by law to subsidize the MTA's transit and commuter railroad systems.

After paying debt service and making these transfers the TBTA has a very narrow operating margin.

The A1 subordinate lien rating reflects the $1.8 billion (approximately 21% of total TBTA consolidated debt) subordinate claim lien on pledged net revenues and the lower standing in the TBTA's flow of funds.

Still, the Aa3 ratings also reflect the critical transportation links provided by the authority's seven bridges and two tunnels in the New York Metro area; relatively strong inelastic traffic demand through economic cycles; strong toll-setting autonomy; a historical record of predictable toll rate increases and a manageable though complex capital improvement program (CIP) given the age of the authority's assets.

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