The credit profile and Rating Outlook of the NYLDC bonds are tied directly to the rating on PANYNJ consolidated bonds. The Outlook is Stable.
KEY RATING DRIVERS FOR PANYNJ BONDS
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.
RATING SENSITIVITIES FOR PANYNJ BONDS
--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.
PANYNJ requested NYLDC to issue liberty revenue bonds in order to finance a portion of the construction costs associated with 1WTC, thus allowing for the use of tax-exempt financing under the Liberty Bond Program, which expired at the close of 2011. NYLDC is a not-for-profit corporation and has no employees or business operations. All NYLDC bonds issued have been done on behalf of other obligors. Given this, Fitch views the risk of an involuntary bankruptcy filing by the NYLDC as consistent with the rating assigned. The bonds issued by NYLDC are non-recourse, special, and limited obligations of NYLDC payable only from revenues received from PANYNJ. All right in these payments has been assigned to the trustee.
PANYNJ is responsible for the construction of 1WTC and remains the principal owner. 1WTC construction was completed earlier in 2014, and approximately 56 percent of the commercial office space has been leased. Principal tenants have taken handover of leased space and are currently fitting it.
For more information, please see Fitch's press release on the port authority dated
The bonds are special obligations of NYLDC and are secured by the trustee's right, title, and interest in the consolidated bond and bond fund. PANYNJ's consolidated bonds are secured by net revenues of PANYNJ and a pledge of the general reserve and consolidated bond reserve funds.
Additional information is available at 'www.fitchratings.com'.
--'Rating Criteria for Infrastructure and Project Finance' (
Rating Criteria for Infrastructure and Project Finance
Saavan Gatfield, +1 212-908-0542
Source: Fitch Ratings
Most Popular Stories
- Pickup Discounts Boost September Auto Sales
- Kurdish Militia Still Lack Weapons, Training
- Lexus Luxury Compact Sedan Wins Buyers
- Review: Pay by Phone or Just Keep Using Plastic?
- N.Y. Ups Awards of State Contracts to Minorities
- Ebola Victim Was Sent Home by Dallas Hospital
- Dallas Parents Fear Students Exposed to Ebola
- Why the Bond Market Isn't as Safe as You Think
- Group Offers Online Help for College Students
- Baker Hughes to Disclose Fracking Chemicals