Fitch has also affirmed the ratings for the authority's existing debt as follows:
--Commercial paper (CP) notes, series A (AMT) (tax-exempt) at 'F1+', authorized up to
--CP notes series B (Non-AMT) (tax-exempt) at 'F1+', authorized up to
The Rating Outlook for the authority's consolidated bonds is Stable.
The ratings are supported by PANYNJ's mature, diverse and monopolistic asset base which notably includes certain very strong airport and bridge/tunnel assets, and are further supported by the authority's conservative debt structure and moderate leverage, with debt service coverage ratio (DSCR) expected to be managed at or above 1.8x. Nevertheless, its extensive capital plan and guardianship of significantly loss-making assets constrain the rating.
KEY RATING DRIVERS
Resilient Cash Flows And Stable Revenue Base: PANYNJ has a monopolistic position over an expansive, diverse portfolio of transportation and commerce related assets, including four metropolitan
High Rate-Setting Flexibility: The authority has demonstrated an ability to produce consistently healthy financial performance, reinforced by strong cost recovery provisions in airline use agreements at airports and timely toll increases on its bridges and tunnels with minimal impact on traffic levels. This flexibility may, however, come under pressure if
Extensive Debt-Funded Capital Plan: PANYNJ's 2014-2023 capital plan totals approximately
Conservative Capital Structure: The authority maintains a nearly 100% fixed-rate, fully amortizing capital structure. Debt Structure: Stronger
Moderate Leverage, Strong Coverage: Leverage is moderate, with 2014 net debt to cash available for debt service (CFADS) expected to be 7.1x (excluding cash in the general fund). Significant balance sheet liquidity, reserving requirements, ability to control operating and maintenance costs, and a demonstrated history of generating DSCR over 2.0x all mitigate leverage and support the rating.
Negative - Weaker financial margins due to slow revenue growth and/or higher rates of growth in operating expenses;
Negative - Significant escalation in expected capital needs and additional leveraging not supported by commensurate revenue increases to maintain DSCRs at or above 1.8x-2.0x;
Negative - The generation of lower revenue than currently forecast from the
Negative - Actions by either the
Negative - Significant new non-core state-mandated investment that impacts future core-investment capability;
Positive - None at present.
Consolidated bonds and notes are secured by net revenues of the authority and a pledge of the general reserve and consolidated bond reserve funds.
PANYNJ's net operating revenue for the year to
Bad weather conditions during first quarter 2014 affected performance of all business segments in the period, with year-over-year (y-o-y) traffic declines experienced both on bridges and tunnels and also at the authority's airports. Despite falling traffic, bridge and tunnel revenue was 2.4% higher than the same period 2013 as a result of mandated toll increases; furthermore, PANYNJ expects to recover increased costs resulting from weather conditions from airlines under its in-place cost recovery agreements.
In particular, Fitch notes the authority's expectation of significant WTC rental revenue being generated over the next few years. It will be important for PANYNJ to realize such revenue in line with, or close to, expectation so as to ensure it does not become reliant on future bridge and tunnel toll increases to maintain its healthy financial profile, as indicated by DSCR remaining no lower than around 1.8x-2.0x.
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 Ports' (
--'Rating Criteria for Airports' (
Rating Criteria for Infrastructure and Project Finance
Rating Criteria for Toll Roads, Bridges and Tunnels
Rating Criteria for Ports
Rating Criteria for Airports
Source: Fitch Ratings
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