Fitch does not rate turnpike revenue bond series 2009A, 2009B, 2012G, 2013B or 2013G, which total
The 'A' rating reflects continued stable traffic and revenue performance on both the New Jersey Turnpike (the turnpike) and
KEY RATING DRIVERS
Mature Traffic Profile Serving Key Commuter and Interstate Routes: The turnpike forms a vital link in the key
Economic Rate-Making Flexibility Constrained by Political Authority: Fitch views toll rates on both the turnpike and parkway of
Well-Defined Capital Plan Largely Debt-Funded: NJTA's
Infrastructure and Renewal Risk: Mid-Range.
Swaps Hedge Variable Rate But Create Basis Risk: NJTA maintains around 15% of its debt profile as variable rate debt, almost entirely hedged with fixed-floating interest rate swaps with counterparties of adequate financial strength. However, the use of LIBOR-linked swaps to hedge SIFMA-indexed debt with respect to 60% of swaps creates a mismatch that can distort the authority's cash flows. Debt Structure: Mid-Range.
Moderate Leverage and Liquidity: Net debt-to-cash flow available for debt service (CFADS), reflecting only the debt service reserve balance as cash deducted from gross debt, is relatively high at approximately 7.7x, expected to rise further over the next few years to around 8.5x in the Fitch base case. Despite this, debt service coverage ratios (DSCR) should remain robust, falling no lower than around 1.5x. Furthermore, Fitch views the authority as having the ability to increase tolls in the medium term in order to support its financial profile, although it understands that NJTA has no plans to do so for the moment.
--Erosion of DSCRs in the medium term below 1.5x for a sustained period would put pressure on the rating.
--Additional debt materially beyond the planned
--Increased transfers to support state transportation projects without commensurate toll increases to ensure system preservation would pressure the rating.
--Conversely, a material reduction in leverage that results in a sustained improvement in NJTA's coverage profile could result in positive rating action.
Turnpike revenue bonds are secured by a first lien on pledged net revenues, which are defined as all tolls, revenues, fees, rents, charges, and other income derived from operating the turnpike (including Build America Bond subsidies), proceeds from business interruption insurance, amounts deposited in the revenue fund from the construction/special project reserve/or general reserve funds, and revenues from qualified swaps and investments.
NJTA expects to issue
For more information, please see Fitch's press release ' Fitch Affirms New Jersey Turnpike Auth's Turnpike Revs 'A'; Outlook Stable'; dated
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
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