Fitch Ratings has assigned an 'A' rating to the Metropolitan
Transportation Authority, New York's (MTA) $500,000,000 transportation
revenue bonds, series 2012E. Fitch also affirms the 'A' rating on
approximately $16.1 billion in outstanding MTA transportation revenue
bonds. The Rating Outlook is Stable.
Bond proceeds will be used to finance transit and commuter projects
associated with the MTA's 2010 - 2014 Capital Plan.
KEY RATING DRIVERS
--Strategic Importance: The MTA transit network is essential to the
economy of the New York region, and the MTA and its regional and federal
partners have demonstrated the ability to produce solutions aimed at
closing projected budget gaps and addressing capital needs.
--Highly Constrained Financial Operations: The MTA's financial
operations are constrained given its extremely large operating profile
and significant retiree pension benefits. The MTA's operating subsidies
are vulnerable to economic conditions. There is limited flexibility to
offset revenue declines to cover operations of the system despite high
debt service coverage ratios.
--Strong Security Pledge: The bonds are secured by a gross lien on a
diverse stream of pledged revenues.
--Extremely Large Capital Needs: The MTA anticipates additional debt to
fund the large 2010 - 2014 MTA Capital Programs. The MTA has the
constant challenge of delicately balancing the large capital needs of
the system while covering operating expenses and maintaining financial
flexibility.
--Growing Annual Debt Burden: The MTA's capacity to continue to leverage
resources to fund expansion projects while meeting renewal and
replacement needs may be limited in the future if projected financial
performance does not come to fruition.
WHAT MAY TRIGGER A RATING ACTION
--Inability to achieve operating efficiencies and implement other key
elements of the cost reduction initiatives and/or maintain an ongoing
state of good repair and other elements of the capital program;
--Significant cost overruns or delays in the capital program's
mega-projects that would require additional funding;
--Additional service cuts or deferral of core capital projects that
result in deterioration of key transportation services;
--Deterioration or limited growth in dedicated tax subsidies.
SECURITY
The transportation revenue bonds are primarily secured by a gross lien
on the MTA's operating receipts and subsidies, including: transit and
commuter rail fares and other operating revenues, surplus toll revenues,
and certain dedicated tax sources, state and local operating subsidies,
and reimbursements.
CREDIT UPDATE
The MTA expects to issue its MTA 2013 Preliminary Budget - July
Financial Plan 2013 - 2016 in late July. The July Financial Plan
includes baseline and below-the-line fare/toll projections, MTA
initiatives and policy actions as well as the MTA's consolidated
financial forecasts. Also included are the individual agency sections
which incorporate descriptions of individual agency programs, supporting
baseline estimated forecasts and details regarding proposed Agency
Budget Reduction Programs (BRP). Information related to the MTA Capital
Program is also included. Following the release of the financial plan
Fitch expects to update its analysis of the credit, focusing on actual
vs. projected operating revenues, expenses and operating subsidies along
with progress on the Capital Plan.
For additional information related to the MTA, please see Fitch's press
release 'Fitch Rates Metropolitan Transportation Authority (NY) Revs
'A'; Stable Outlook' dated April 10, 2012 and Feb. 28, 2012.
Additional information is available at 'www.fitchratings.com'.
The ratings above were solicited by, or on behalf of, the issuer, and
therefore, Fitch has been compensated for the provision of the ratings.
Applicable Criteria and Related Research:
--'Rating Criteria for Infrastructure and Project Finance' (Aug. 16,
2011);
--'Tax Supported Rating Criteria' (Aug. 11, 2011).
Applicable Criteria and Related Research:
Rating Criteria for Infrastructure and Project Finance
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=648832
Tax-Supported Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=648898
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DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING
THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS.
IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE
AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'.
PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS
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OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES
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