BOSTON (S&P Global Ratings) Nov. 22, 2024--S&P Global Ratings said today that a review of U.S. not-for-profit transportation infrastructure enterprise (TIE) issuers benefiting from tax support has resulted in positive rating actions of generally one notch on about 6% of the total TIE universe (see table 1).
These rating actions reflect our view of the often-substantial financial benefits of nonoperating tax revenue provided to many transportation infrastructure entities that reduce volatility as well as post-pandemic actions taken by local or regional stakeholders to support credit stability.
In some cases, TIE issuer credit ratings (ICRs) represent the obligor's creditworthiness for separate priority lien ratings (e.g., sales tax) on debt often issued by the same obligor. We affirmed the related priority lien ratings, however, we narrowed our view of the relationship or linkage between the TIE ICRs or obligor's creditworthiness (OC) of transportation entities and their priority lien rating (see table 2).
The rating actions affect several transportation asset classes, including smaller ports and airports as well as many mass transit issuers, the latter of which represented about half of the total upgrades.
While mass transit issuers continue to experience the effects of the pandemic with weaker ridership and farebox revenue, many also received higher and sometimes offsetting levels of nonoperating revenue from taxes, particularly sales taxes. Some also benefited from increased financial support from governments--as well as federal operating support--as policymakers and other stakeholders stepped in to fill the gap left by lower farebox revenue collections.
In our view, the combined result of higher tax receipts and local or regional measures to support transit operators provides credit stability for the sector. (See "U.S. Transportation Infrastructure Transit Update: Sector View Now Stable As Dedicated Tax Growth Mitigates Lower Ridership Revenue," published Sept. 11, 2024, on RatingsDirect.)
Under our criteria, TIE issuers can receive as many as four notches of uplift to their anchor from taxes received--either directly or from recurring allocations, distributions, or appropriations from other governmental entities--which smooths revenue volatility.
Considerations in each of our reviews included the size, wealth and income levels, and diversity of the tax base, the performance of and outlook for tax revenue and trends, the significance of tax revenue to total revenue sources, and the willingness and ability to increase taxes. Rating and outlook changes detailed in table 1 incorporate a review of these factors, informed by policymakers' and governments' supportive actions that we believe enhanced stability and long-term credit quality.
Finally, the relationship between the TIE ICR or obligor creditworthiness of transportation entities and their priority lien rating reflects our observation that providers of critical public services, particularly mass transit operators, do not demonstrate an extraordinary ability to reduce expenditures during periods of stress. This evolution in our view resulted in a change in the relationship or linkage to either "close" or "mitigated" as outlined in our priority-lien criteria.
Table 1
U.S. not-for-profit transportation infrastructure enterprise rating and outlook actions | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Issuer | Asset class | Previous rating | Previous outlook | Current rating | Current outlook | |||||||
Hidalgo County Regional Mobility Authority, 1st lien | Toll road | BBB- | Stable | BBB | Stable | |||||||
Hidalgo County Regional Mobility Authority, 2nd lien | Toll road | BB+ | Stable | BBB- | Stable | |||||||
Missoula Parking Commission | Parking | A | Stable | A+ | Stable | |||||||
Peninsula Corridor Joint Powers Board | Transit | A+ | Stable | AA- | Stable | |||||||
Port of Tacoma, 1st lien | Port | AA | Stable | AA+ | Stable | |||||||
Port of Tacoma, 2nd lien * | Port | AA- | Stable | AA | Stable | |||||||
Port of Vancouver | Port | A+ | Stable | AA- | Stable | |||||||
Regional Transportation District | Transit | AA | Stable | AA+ | Stable | |||||||
Roaring Fork Transportation Authority | Transit | AA | Stable | AA+ | Stable | |||||||
San Francisco Bay Area Rapid Transit | Transit | A+ | Negative | AA- | Negative | |||||||
San Francisco Municipal Transportation Agency | Transit | A+ | Negative | AA- | Negative | |||||||
VIA Metropolitan Transit Authority | Transit | AA | Stable | AA+ | Stable | |||||||
Washington Metropolitan Area Transit Authority | Transit | AA- | Negative | AA- | Stable | |||||||
Williamson County Airport Authority | Airport | A+ | Stable | AA- | Stable | |||||||
*Joint rating affirmed at 'AA+/A-1'. |
Table 2
Priority lien tax rating and outlook actions | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Issuer | Previous rating | Previous outlook | Current rating | Current outlook | Previous OC linkage | Current OC linkage | ||||||||
Central Puget Sound Regional Transit Authority, first lien | AAA | Stable | AAA | Stable | Mitigated | Close | ||||||||
Central Puget Sound Regional Transit Authority, fourth lien | AA+ | Stable | AA+ | Stable | Mitigated | Close | ||||||||
Central Puget Sound Regional Transit Authority, second lien | AAA | Stable | AAA | Stable | Mitigated | Close | ||||||||
Dallas Area Rapid Transit * | AA+ | Stable | AA+ | Stable | Limited | Mitigated | ||||||||
Greater Cleveland Regional Transit Authority | AAA | Stable | AAA | Stable | Limited | Mitigated | ||||||||
Harris County Metropolitan Transit Authority | AAA | Stable | AAA | Stable | Limited | Mitigated | ||||||||
Indianapolis Public Transportation Corp. | AA- | Stable | AA- | Stable | Mitigated | Close | ||||||||
Los Angeles County Metropolitan Transportation Authority, general revenue bonds | AA+ | Stable | AA+ | Stable | Mitigated | Close | ||||||||
Los Angeles County Metropolitan Transportation Authority, Measure R junior subordinate lien | AA | Stable | AA | Stable | Limited | Mitigated | ||||||||
Los Angeles County Metropolitan Transportation Authority, Measure R senior lien | AAA | Stable | AAA | Stable | Limited | Mitigated | ||||||||
Los Angeles County Metropolitan Transportation Authority, Proposition A | AAA | Stable | AAA | Stable | Limited | Mitigated | ||||||||
Los Angeles County Metropolitan Transportation Authority, Proposition C | AAA | Stable | AAA | Stable | Limited | Mitigated | ||||||||
Metropolitan Atlanta Rapid Transit Authority * | AAA | Stable | AAA | Stable | Limited | Mitigated | ||||||||
New Orleans Regional Transit Authority | AA- | Stable | AA- | Stable | Limited | Mitigated | ||||||||
Peninsula Corridor Joint Powers Board, Measure RR sales tax revenues | AA+ | Stable | AA+ | Stable | Limited | Mitigated | ||||||||
Regional Public Transportation Authority | AA+ | Stable | AA+ | Stable | Limited | Mitigated | ||||||||
Regional Transportation District, first lien of 0.4% sales tax and second lien of 0.6% sales tax | AAA | Stable | AAA | Stable | Limited | Mitigated | ||||||||
Regional Transportation District, first lien of 0.6% sales tax | AAA | Stable | AAA | Stable | Limited | Mitigated | ||||||||
Roaring Fork Transportation Authority, sales tax | AA | Stable | AA | Stable | Mitigated | Close | ||||||||
San Francisco Bay Area Rapid Transit District, sales tax | AA+ | Negative | AA+ | Negative | Limited | Mitigated | ||||||||
San Mateo County Transit District | AAA | Stable | AAA | Stable | Limited | Mitigated | ||||||||
Santa Clara Valley Transportation Authority, 1976 sales tax | AAA | Stable | AAA | Stable | Limited | Mitigated | ||||||||
Santa Clara Valley Transportation Authority, Measure A | AAA | Stable | AAA | Stable | Limited | Mitigated | ||||||||
Santa Cruz Metropolitan Transit District, Measure G | AA | Stable | AA | Stable | Limited | Mitigated | ||||||||
Snohomish County Public Transportation Benefit Area Corp. | AAA | Stable | AAA | Stable | Mitigated | Close | ||||||||
Sonoma-Marin Area Rail Transit District | AA | Stable | AA | Stable | Limited | Mitigated | ||||||||
St. Louis Transit, Proposition A Sales Tax | AA | Positive | AA | Stable | Limited | Mitigated | ||||||||
St. Louis Transit, Proposition M Sales Tax | AA | Positive | AA | Stable | Limited | Mitigated | ||||||||
Tri-County Metropolitan Transportation District | AAA | Stable | AAA | Stable | Limited | Mitigated | ||||||||
Utah Transit Authority, senior lien | AA+ | Positive | AA+ | Positive | Mitigated | Close | ||||||||
Utah Transit Authority, subordinate lien | AA | Stable | AA | Stable | Mitigated | Close | ||||||||
VIA Metropolitan Transit Advanced Transportation District, sales tax revenue bonds | AAA | Stable | AAA | Stable | Mitigated | Close | ||||||||
VIA Metropolitan Transit Authority, sales tax | AAA | Stable | AAA | Stable | Mitigated | Close | ||||||||
*Short-term rating affirmed at 'A-1+'. OC--Obligor's creditworthiness. |
Certain terms used in this report, particularly certain adjectives used to express our view on rating relevant factors, have specific meanings ascribed to them in our criteria, and should therefore be read in conjunction with such criteria. Please see Ratings Criteria at www.spglobal.com/ratings for further information. Complete ratings information is available to RatingsDirect subscribers at www.capitaliq.com. All ratings affected by this rating action can be found on S&P Global Ratings' public website at www.spglobal.com/ratings.
Primary Credit Analyst: | Kurt E Forsgren, Boston + 1 (617) 530 8308; kurt.forsgren@spglobal.com |
Secondary Contact: | Rob M Marker, Denver + 1 (303) 721 4264; Rob.Marker@spglobal.com |
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