Press Release|Public Finance
KBRA Assigns AA- Rating with Stable Outlook for the Turnpike Authority of Kentucky Economic Development Road Revenue Refunding Bonds (Revitalization Projects) 2024 Series A
28 May 2024 | New York
KBRA assigns a long-term rating of AA- with a Stable Outlook for the Turnpike Authority of Kentucky Economic Development Road Revenue Refunding Bonds (Revitalization Projects) 2024 Series A. Concurrently, KBRA affirms the AA- rating and Stable Outlook on the Authority’s outstanding Economic Development Road Revenue Bonds (Revitalization Projects).
Key Credit Considerations
The rating was affirmed because of the following key credit considerations:
Credit Positives:
- The Road Fund revenues that provide for lease rental payments can only be used for transportation purposes.
- The Commonwealth’s use of lease financing is the primary funding mechanism for essential purpose road and highway infrastructure.
Credit Challenges:
- Wealth and income metrics lag both the region and the U.S.
- Road Fund revenues are subject to economic volatility, although there is a statutory floor on Motor Fuel Tax revenues.
Rating Sensitivities
For Upgrade:
- Material improvement in coverage due to an increase in available Road Fund Revenues and/or a reduction in annual lease rental payments.
- The imposition of additional covenants that provide further bondholder protection.
For Downgrade:
- Significant reduction in debt service coverage levels due to decline in available Road Fund Revenues and/or the issuance of additional debt.
- Any failure on the part of the Commonwealth to biennially renew the lease or to appropriate lease rental payments.
To access rating and relevant documents, click here.