In addition, the bridge system has an outstanding obligation of approximately
KEY RATING DRIVERS
HIGH EXPOSURE TO VOLATILITY AND COMPETITION: The bridge system serves the sizable
Revenue Risk - Volume: Weaker
MODERATE ECONOMIC RATE-MAKING FLEXIBILITY: Toll rates charged are consistent with nearby bridge crossings. However, the proximity of a competing facility limits economic ratemaking flexibility of the system. Management has historically demonstrated a proactive position toward raising toll rates during periods of continued traffic declines to stabilize revenue.
Revenue Risk - Price: Midrange
CONSERVATIVE DEBT STRUCTURE: All outstanding debt is fixed rate, with a declining debt service schedule, and sufficient legal protections. Limited tax obligation bonds have backup pledges from
Debt Structure: Stronger
MANAGEABLE CAPITAL EXPENDITURE NEEDS: The bridges are generally expressed to be in good condition.
STRONG COVERAGE AND LOW LEVERAGE: The bridge system has a strong debt service coverage ratio of 4.11x, providing significant cushion against traffic volatility. The bridge system also has low leverage with net debt to cash flow available for debt service at 0.74x. Unrestricted cash has also improved to
--The return of sizeable declines in passenger traffic or toll revenue levels driven by either violence related to drug cartels or considerable contraction of the manufacturing industry or cross-border trade;
--Changes in key financial metrics, such as coverage or liquidity, resulting from management's reluctance to raise tolls as planned/needed, or its inability to control operating and maintenance (O&M) expenses;
--Meaningful additional leverage.
SECURITY: The outstanding revenue bonds are secured by a net revenue pledge of the Cameron County International Bridge System and by a back-up pledge of a direct and continuing ad valorem tax, within the limits prescribed by law, on all taxable property located within the county.
Total crossings on the bridge system have decreased year over year since 2006 as a result of the economic downturn, security issues and toll increases. Total crossings in fiscal 2013 decreased slightly by 0.9% to 4.9 million from 5.0 million. Passenger and commercial traffic decreased by 3.1% and 3.3%, respectively, while pedestrian crossing increased by 2.5%. Additionally, total revenue declined 2.4% in fiscal 2013 to 15.2 million from 15.6 million.
Toll rates are reviewed for adjustments by the county each year. Toll rates for passenger cars were increased to
The county is anticipating commercial traffic, which represents approximately a quarter of toll revenue, to improve as a result of network improvements in
The rating is supported by the bridge system's high coverage and liquidity metrics and low leverage. Debt service coverage increased to 4.1x in 2013 from 3.5x in fiscal 2012 due to the bridge system's declining debt service schedule. Fitch views this level of protection as necessary given the volatility of the traffic base that is tied to the performance of the maquiladora industry as well as border security threats. Accordingly, Fitch conducted several sensitivity analyses. Within Fitch's rating case, which assumes a 20% reduction in traffic, coverage is expected to remain north of 3.0x.
The system supports subordinated transfers to the
The system comprises three bridges located in the greater
Additional information is available at 'www.fitchratings.com'.
--'Rating Criteria for Infrastructure and Project Finance,' (
--'Rating Criteria for Toll Roads, Bridges, and Tunnels,' (
Rating Criteria for Infrastructure and Project Finance
Rating Criteria for Toll Roads, Bridges and Tunnels
Source: Fitch Ratings
Most Popular Stories
- Major Phone Makers Sign Anti-Phone-Theft Pledge
- College Board Offers a Sneak Peak at New SAT
- 'Beige Book' Federal Reserve Survey, April 2014: Full Text
- Salsa Legend Cheo Feliciano Killed in Car Crash
- Miss. Gov. Signs Bills to Curb Unions
- Hiring and Weekly Jobless Claims Both Edge Up
- Yellen Remarks, Market Data Give Stocks a Boost
- Chevrolet's Small SUV Coming to the U.S.
- Is This Job Too Good to Be True?
- Yahoo Struggles Despite Alibaba Boost