Fitch rates N.Y.-N.J. port authority bonds AA-
The bond-rating house Fitch has assigned an AA- rating to an issue of $450 million worth of consolidated bonds that the Port Authority of New York and New Jersey plans to sell competitively Thursday.
Bond proceeds will be applied to fund various capital plan projects and refund portions of outstanding consolidated bonds.
In addition, Fitch affirmed the ratings and the following outstanding debt of the authority:
* $9 billion consolidated bonds at AA-.
* $350 million consolidated notes at F1+.
* $519.6 million versatile structure obligations (VSO) at A+/F1+.
Fitch said consolidated bonds and notes are secured by net revenues of the authority and a pledge of the general reserve and consolidated bond reserve funds. It said VSOs are secured by numerous bank standby bond purchase agreements, and benefit from a subordinate pledge of the consolidated bond reserve fund.
Fitch said the rating outlook for all of the long-term securities is Stable.
Fitch said the AA- and F1+ ratings “reflect the strong demand for New York-New Jersey-based travel, supported by the region’s expanding economy and status as a global center of commerce; the authority’s expansive, diverse portfolio of transportation and commerce-related assets; institutionalized practices and fiscal conservatism; consistently healthy financial performance and debt service coverage, bolstered by the cost recovery nature of use agreements in place primarily at the airports, cost control and timely toll increases; and significant balance sheet liquidity.”
“The primary credit concern remains the potential for increased financial leverage and reduced liquidity as a result of the authority’s very large financial commitments made for the improvement and expansion of its existing assets along with developments at the World Trade Center site and the Trans-Hudson Express Tunnel Project, ' a new tunnel for commuter trains under the Hudson River, Fitch said.
It noted the World Trade Center and tunnel commitments are budgeted as part of the authority’s overall $26.1 billion 2007-2016 capital program. They are expected to be largely offset by third-party funding sources such as government grants, insurance proceeds, and separately secured financings.
These “are expected to limit the burden of these commitments on the authority’s consolidated bond credit,” Fitch said.
Fitch rates N.Y.-N.J. port authority bonds AA-
