SAN FRANCISCO - S&P Global Ratings assigned its ‘AA-’ long-term rating to the Metropolitan Transportation Authority (MTA), N.Y.‘s $200 million series 2017A transportation revenue green bonds (TRBs; Climate Bond Certified) and its ‘SP-1+’ short-term rating to the MTA’s $700 million series 2017A transportation revenue bond anticipation notes (BANs).
In addition, we affirmed the following ratings:
- ‘AA-’ issuer credit rating (ICR) and ‘aa-’ stand-alone credit profile (SACP) on the MTA;
- ‘AA-’ long-term rating and underlying rating (SPUR) on the MTA’s previously issued TRBs;
- ‘SP-1+’ short-term rating on the MTA’s previously issued transportation revenue BANs; and
- ‘AAA/A-1+’, ‘AA+/A-1’, and ‘AA/A-2’ dual ratings on the MTA’s various other TRBs outstanding, reflecting the application of our joint criteria assuming low correlation.
The outlook, where applicable, is stable.
The series 2017A TRB proceeds will be used to retire previously issued BANs, while the series 2017A BANs are being issued to finance existing approved transit and commuter projects.
“The ‘AA-’ ICR, long-term rating, and SPUR, and ‘aa-’ SACP reflect our view of the MTA’s very low industry risk, extremely strong economic fundamentals and market position, and very strong management and financial flexibility,” said S&P Global Ratings credit analyst Paul Dyson.
Securing the TRBs is gross revenue before expenses of the MTA, the New York City Transit Authority, the Manhattan and Bronx Surface Transit Operating Authority (MaBSTOA), the Long Island Rail Road Co. (LIRR), Metro-North Commuter Railroad Co. (MNCRC), and MTA Bus Co. The pledged revenue consists of fares and other operating receipts from some MTA subsidiaries (MTA Bus, LIRR, and MNCRC) and the MTA’s affiliates (the transit authority and MaBSTOA).
The ‘SP-1+’ rating on the MTA’s BANs reflects what we consider a low market risk profile (because the MTA has strong authority to take out the temporary bonds with proceeds from TRBs before maturity), strong market access, and strong information disclosure. In addition, the ‘SP-1+’ rating reflects our ‘AA-’ long-term rating and SPUR on the revenue bonds and our ‘AA-’ ICR.
“The stable outlook on the SPUR reflects our anticipation that the MTA will maintain an extremely strong enterprise risk profile and strong financial risk profile,” added Mr. Dyson. We are unlikely to raise the rating during the next two years, given the agency’s significant capital needs and limited projected upside in debt service coverage (DSC) or liquidity. Conversely, we could lower the rating in the next two years if demand falls short of the forecast, liquidity decreases materially, or DSC falls to levels we consider weak.