Press Release|Public Finance

KBRA Assigns AA- Rating to Pennsylvania Turnpike Commission Turnpike Revenue Bonds, Series A of 2023; Affirms Ratings for Related Bonds; Outlook is Stable

14 Aug 2023   |   New York


KBRA assigns a long-term rating of AA- to the Pennsylvania Turnpike Commission Turnpike Revenue Bonds, Series A of 2023.

KBRA additionally affirms:

  • The long-term rating of AA- for the Commission's outstanding Turnpike Revenue Bonds
  • The long-term rating of A+ for the Commission's outstanding Turnpike Subordinate Revenue Bonds
  • The long-term rating of AA- for the Commission's outstanding Motor License Fund-Enhanced Turnpike Subordinate Special Revenue Bonds

The Outlook for each obligation is Stable.

Key Credit Considerations

The rating actions reflect the following key credit considerations:

Credit Positives

  • The Pennsylvania Turnpike System is a highly essential, statewide, regional toll road system with limited competition.
  • The Commission has full rate setting autonomy which, together with prudent finance management and controls, has supported strong margins and stable debt service coverage.
  • Liquidity is ample.

Credit Challenges

  • The Commission’s O&M, capital and existing debt obligations, including its outstanding Act 44/89 obligations, are substantial and require annual toll increases, the cumulative effect of which may at some point dampen traffic demand, reducing operating margins and financial flexibility.
  • The planned issuance of $4.2 billion in senior obligations per the 10-year capital plan may pressure subordinate obligation coverage if actual traffic demand is materially weaker than forecast, although the Commission’s capital plans remain flexible if traffic volumes are not consistent with forecasts.

Rating Sensitivities

For Upgrade

  • A sustained trend of increasing net revenue resulting in debt service coverages well in excess of the Commission’s targets of 2.0x annual debt service on senior lien, 1.30x combined annual senior and subordinate debt service and 1.20x annual debt service for all obligations.

For Downgrade

  • A sustained decline in net revenue debt service coverage ratios below the Commission’s targets for all obligations.

To access rating and relevant documents, click here.


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