KBRA Assigns AA- to Pennsylvania Turnpike Commission Turnpike Revenue Refunding Bonds, First Series of 2024; Affirms Related Ratings
05 August 2024 - 9:28PM
Business Wire
KBRA assigns a long-term rating of AA- to the Pennsylvania
Turnpike Commission Turnpike Revenue Refunding Bonds, First Series
of 2024. KBRA additionally affirms the long-term rating of: AA- for
the Commission's outstanding Turnpike Revenue Bonds; A+ for the
Commission outstanding Turnpike Subordinate Revenue Bonds; and, AA-
for the Commission's outstanding Motor License Fund Enhanced
Turnpike Subordinate Special Revenue Bonds. The rating Outlook is
Stable for each obligation.
Key Credit Considerations
The rating actions reflect the following key credit
considerations:
Credit Positives
- The Pennsylvania Turnpike System is a highly essential,
statewide, regional toll road system with limited competition.
- The Commission has full rate setting autonomy which, together
with prudent finance management and controls, has supported strong
margins and stable debt service coverage.
- Liquidity is ample.
Credit Challenges
- The Commission’s O&M, capital and existing debt
obligations, including its outstanding Act 44/89 obligations, are
substantial and require annual toll increases, the cumulative
effect of which may at some point dampen traffic demand, reducing
operating margins and financial flexibility.
- The planned issuance of $4.0 billion in senior obligations per
the 10-year capital plan may pressure subordinate obligation
coverage if actual traffic demand is materially weaker than
forecast, although the Commission’s capital plans remain flexible
if traffic volumes are not consistent with forecasts.
Rating Sensitivities
For Upgrade
- A sustained trend of increasing net revenue resulting in debt
service coverages well in excess of the Commission’s targets of
2.0x annual debt service on senior lien, 1.30x combined annual
senior and subordinate debt service and 1.20x annual debt service
for all obligations.
For Downgrade
- A sustained decline in net revenue DSCRs below the Commission’s
targets for all obligations.
To access rating and relevant documents, click here.
Methodologies
- Public Finance: U.S. Public Toll Roads, Bridges & Tunnels
Revenue Bond Rating Methodology
- Public Finance: U.S. Special Tax Revenue Bond Rating
Methodology
- ESG Global Rating Methodology
Disclosures
A description of all substantially material sources that were
used to prepare the credit rating and information on the
methodology(ies) (inclusive of any material models and sensitivity
analyses of the relevant key rating assumptions, as applicable)
used in determining the credit rating is available in the
Information Disclosure Form(s) located here.
Information on the meaning of each rating category can be
located here.
Only those ratings on securities issued by this Issuer that also
are denoted on the Security Ratings tab for this Issuer on KBRA.com
as “endorsed” by Kroll Bond Rating Agency Europe Limited into the
European Union and/or by Kroll Bond Rating Agency UK Limited into
the UK are covered by the disclosures set forth in this press
release and the corresponding Information Disclosure Form. No other
ratings on issuances by this Issuer have been endorsed into the
European Union or the UK, and the disclosures set forth herein and
in the corresponding Information Disclosure Form are inapplicable
to those ratings and may not be used for regulatory purposes by
European Union or UK investors in these securities.
Further disclosures relating to this rating action are available
in the Information Disclosure Form(s) referenced above. Additional
information regarding KBRA policies, methodologies, rating scales
and disclosures are available at www.kbra.com.
About KBRA
Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit
rating agency registered with the U.S. Securities and Exchange
Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is
registered as a CRA with the European Securities and Markets
Authority. Kroll Bond Rating Agency UK Limited is registered as a
CRA with the UK Financial Conduct Authority. In addition, KBRA is
designated as a designated rating organization by the Ontario
Securities Commission for issuers of asset-backed securities to
file a short form prospectus or shelf prospectus. KBRA is also
recognized by the National Association of Insurance Commissioners
as a Credit Rating Provider.
Doc ID: 1005384
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Analytical Contacts
Peter Scherer, Senior Director (Lead Analyst) +1 646-731-2325
peter.scherer@kbra.com
Linda Vanderperre, Senior Director +1 646-731-2482
linda.vanderperre@kbra.com
Karen Daly, Senior Managing Director (Rating Committee Chair) +1
646-731-2347 karen.daly@kbra.com
Business Development Contacts
William Baneky, Managing Director +1 646-731-2409
william.baneky@kbra.com
James Kissane, Senior Director +1 646-731-2380
james.kissane@kbra.com