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Credit FAQ: How The Proposed Global Not-For-Profit Transportation Criteria Could Affect Mass Transit Ratings

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Credit FAQ: How The Proposed Global Not-For-Profit Transportation Criteria Could Affect Mass Transit Ratings

On July 30, 2019, S&P Global Ratings published a request for comment (RFC) on proposed updates to its methodology "U.S. And Canadian Not-For-Profit Transportation Infrastructure Enterprises: Methodologies And Assumptions," published March 12, 2018. The proposed updates, in "Request For Comment: Global Not-For-Profit Transportation Infrastructure Enterprises: Methodologies And Assumptions," would expand the scope of these criteria to issuers globally and add mass transit systems in our definition of transportation infrastructure enterprises (TIEs). This article answers frequently asked questions related to the proposed criteria updates.

Frequently Asked Questions

What mass transit entities are in-scope of the proposed criteria updates?

See the list in table 1.

Table 1

Ratings Of In-Scope Mass Transit Credits As Of Aug. 27, 2019
State Country Senior-lien issue rating Outlook
British Columbia Ferry Services Inc. N/A Canada AA- (1) Positive
Societe de Transport de Montreal (STM) N/A Canada AA- (1) Stable
Rheinbahn AG N/A Germany AA/A-1+ (1) Stable
Transport for London (TfL) N/A Great Britain AA-/A-1+ (1) Negative
Consorcio de Transportes de Bizkaia (CTB) N/A Spain A+/A-1 (1) Positive
Alameda Contra Costa Transit District CA U.S. A+ Stable
Bi-State Development Agency MO U.S. AA+ (2) Stable
Capital Metropolitan Transportation Authority TX U.S. AA- (1) Stable
Central Puget Sound Regional Transit Authority WA U.S. AAA (2) Stable
Chicago Transit Authority IL U.S. A+ Stable
Chicago Transit Authority IL U.S. AA (2) Stable
Corpus Christi Regional Transportation Authority TX U.S. A+ Stable
Dallas Area Rapid Transit TX U.S. AA+ (2) Stable
Greater Cleveland Regional Transit Authority OH U.S. AA+ (2) Stable
Harris County Metropolitan Transit Authority TX U.S. AAA (2) Stable
Indianapolis Public Transportation Corp. IN U.S. AA- (2) Stable
Jefferson Transit Authority WA U.S. AA (2) Stable
Los Angeles County Metropolitan Transportation Authority CA U.S. AAA (2) Stable
Metropolitan Atlanta Rapid Transit Authority GA U.S. AA+ (2) Stable
Metropolitan Transportation Authority of New York NY U.S. A Negative
Napa Valley Transportation Authority CA U.S. A- (1) Stable
New Orleans Regional Transit Authority LA U.S. A (2) Stable
Peninsula Corridor Joint Powers Board CA U.S. A+ Stable
Regional Public Transportation Authority (Valley Metro) AZ U.S. AA+ (2) Stable
Regional Transportation District CO U.S. AA- Stable
Regional Transportation District CO U.S. AAA (2) Stable
Roaring Fork Transportation Authority CO U.S. AA (2) Stable
Sacramento Regional Transit District CA U.S. A- Stable
San Diego Metropolitan Transit System CA U.S. AA- Stable
San Francisco Bay Area Rapid Transit CA U.S. AA+ (2) Stable
San Francisco Municipal Transportation Agency CA U.S. AA Stable
San Mateo County Transit District CA U.S. AAA (2) Stable
Santa Clara Valley Transportation Authority CA U.S. AA+/A-1+ (2) Stable
Snohomish County Public Transportation Benefit Area Corp. WA U.S. AAA (3) Stable
Sonoma Marin Area Rail Transit District CA U.S. AA (2) Stable
St. Cloud Metro Transit Commission MN U.S. AA- Stable
Tri-County Metropolitan Transportation District OR U.S. AAA (2) Stable
Utah Transit Authority UT U.S. AA (2) Stable
VIA Metropolitan Transit Authority TX U.S. A+ Stable
VIA Metropolitan Transit Authority TX U.S. AA (2) Stable
Washington Metropolitan Area Transit Authority DC U.S. AA- Stable
(1) Long-term rating refers to the entity issuer credit rating. (2) Rating is based on our priority-lien criteria. (3) Rating not yet reviewed under our priority-lien criteria.
How does S&P Global Ratings factor in transit operations when rating issuers of sales tax bonds?

Under our rating methodology "Priority-Lien Tax Revenue Debt", published Oct. 22, 2018, we evaluate the priority-lien revenue stream (expressed as a stand-alone credit profile). In addition, we analyze the effect, if any, of caps and overrides based on the related obligor's creditworthiness. To determine obligor creditworthiness, we apply "Mass Transit Enterprise Ratings: Methodology And Assumptions", published Dec. 18, 2013. Under the RFC, this would change and instead we would assess obligor creditworthiness using our proposed criteria "Global Not-For-Profit Transportation Infrastructure Enterprises: Methodologies And Assumptions."

What impact would the proposed criteria have on in-scope mass transit issuers of sales tax bonds rated under S&P Global Ratings' priority-lien criteria?

Testing suggests that approximately two-thirds of mass transit ratings would be unchanged.

Does S&P Global Ratings plan to update the Credit FAQ "Criteria Considerations For Mass Transit Agency Ratings," published Nov. 14, 2018?

This Credit FAQ outlines how we currently evaluate mass transit entities that have debt secured by special taxes applying our priority-lien and mass transit criteria. If the RFC becomes final criteria, our mass transit criteria will be superseded and the exception outlined in this Credit FAQ will no longer be applicable. As noted above, ratings derived using our priority-lien criteria will still have a linkage to the creditworthiness of mass transit entities using the Global TIE criteria.

This report does not constitute a rating action.

Analytical Contact:Joseph J Pezzimenti, New York (1) 212-438-2038;
joseph.pezzimenti@spglobal.com
Paul J Dyson, San Francisco (1) 415-371-5079;
paul.dyson@spglobal.com
Kurt E Forsgren, Boston (1) 617-530-8308;
kurt.forsgren@spglobal.com
Todd R Spence, Farmers Branch (1) 214-871-1424;
todd.spence@spglobal.com
Jane H Ridley, Centennial (1) 303-721-4487;
jane.ridley@spglobal.com
Bhavini Patel, CFA, Toronto (1) 416-507-2558;
bhavini.patel@spglobal.com

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