BOSTON (S&P Global Ratings) - In a report released today, S&P Global Ratings said its 2018 outlook for business conditions and credit quality across the public transportation sector is stable across most transportation subsectors (airports, ports, federal grant-secured and parking), and positive for the toll road and bridge sector.
"We have maintained our positive outlook on the toll sector because we expect continued economic expansion to produce traffic and toll revenue growth faster than base-case GDP, with ongoing implementation of tolling technology along with congestion or peak hour pricing enhancing financial profiles," said S&P Global Ratings credit analyst Kurt Forsgren in the report, entitled, "U.S. Transportation Sector 2018 Outlook: Credit Quality Will Largely Be Stable, But Will Infrastructure Finally Take The Spotlight?"
Largecapital programs that increase leverage, exposure to disruptive trade policies, spending by issuers without a commensurate increase in revenue sources, or pressure on general governmental revenues historically used for transportation purposes from strained state and local governments are credit risks.
After no progress in 2017, we anticipate a long-awaited proposal from the Trump Administration in 2018 -- followed by renewed dialogue by policy makers -- to address the acknowledged underinvestment in infrastructure, specifically transportation. While optimists hope for a long-term fix to the diminishing federal Highway Trust Fund balance, which is forecast to be depleted in 2021, we believe that is unlikely this year. On the heels of the December 2017 tax law and forecast increases to the federal deficit, it is difficult to handicap Congressional appetite for a significant rise in direct federal funding for infrastructure along absent any required revenue enhancements or expenditure reductions. We expect the issues of how to and who should fund infrastructure development will remain unresolved in 2018.
