Various Pennsylvania Turnpike Commission Ratings Raised On Criteria A Outlook Stable

Stocks and Financial Services Press Releases Thursday June 7, 2018 10:52
CHICAGO--7 Jun--S&P Global Ratings

CHICAGO (S&P Global Ratings) June 6, 2018--S&P Global Ratings has raised its long-term rating and underlying rating (SPUR) on the Pennsylvania Turnpike Commission's (PTC) senior-lien turnpike revenue bonds and subordinate revenue bonds outstanding, to 'A+' from 'A' and 'A' from 'A-', respectively. At the same time, S&P Global Ratings raised its rating on the PTC's series 2005 variable-rate motor license registration fee bonds to 'A+' from 'A'. The outlook is stable.

"The rating action reflects the application of our revised criteria, 'U.S. And Canadian Not-For-Profit Transportation Infrastructure Enterprises,' published on March, 12 2018," said S&P Global Ratings credit analyst Kevin Archer.

Our analysis considers the registration fee revenue stream that we believe will not cover debt service on the variable rate bonds consistently, and incorporates the commission's ability to support the debt service from other legally available funds. Under our multiple revenue streams criteria, we consider our rating on the PTC the strong link, and tie our rating on the bonds to our rating on the commission's senior-lien turnpike revenue bonds.

The ratings reflect the combination of the commission's very strong enterprise risk profile and strong financial risk profile. Our enterprise risk profile assessment incorporates the Pennsylvania Turnpike's generally favorable traffic trends (despite frequent toll rate increases) due to its important role, strategic location, and lack of significant competition from toll-free roads. Our financial risk profile assessment considered the PTC's good revenue growth from frequent toll rate increases and generally favorable traffic trends that we expect to continue. This will allow the commission to maintain strong financial performance and an adequate capacity to manage rising debt levels from debt-financing its rolling, multi-billion dollar capital improvement program and legislative mandated payment obligations.

The large and mature system consists predominantly of the 359-mile east-west Mainline Section, the 110-mile north-south section (the Northeast Extension), the 16-mile Beaver Valley Expressway, the 13-mile Amos K. Hutchinson Bypass, the 48-mile completed portion of the Mon/Fayette Expressway, and the six-mile segment of the Southern Beltway on which tolls are collected. The Mainline Section traverses southern Pennsylvania and connects the Ohio Turnpike at the system's western end with the New Jersey Turnpike at the system's eastern end.

The stable outlook reflects our opinion that the PTC will maintain total debt service coverage (DSC; S&P Global Ratings-calculated) near 1.25x and its financial capacity to manage its rising debt burden will not diminish.

We do not expect to raise the ratings during the next two years, due to our opinion that the commission's total DSC (S&P Global Ratings-calculated) will not increase sustainably to levels significantly above 1.25x given the PTC's additional debt plans.

We could lower the ratings in the next two years if we believe revenue growth needed for the commission to maintain total DSC (S&P Global Ratings-calculated) near 1.25x or adequately manage its rising debt burden is not feasible.

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.standardandpoors.com for further information. Complete ratings information is available to subscribers of RatingsDirect at www.capitaliq.com. All ratings affected by this rating action can be found on S&P Global Ratings' public website at www.standardandpoors.com. Use the Ratings search box located in the left column.


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