Press Release|Public Finance
KBRA Assigns AA Rating, Stable Outlook, to Jacksonville Transportation Authority Senior Lien Local Option Gas Tax Refunding Revenue Bonds, Series 2024 and Senior Lien Local Option Gas Tax Refunding Revenue Bonds, Series 2025
17 Sep 2024 | New York
KBRA has assigned a long-term rating of AA, with a Stable Outlook, to Jacksonville Transportation Authority Senior Lien Local Option Gas Tax Refunding Revenue Bonds, Series 2024 and Senior Lien Local Option Gas Tax Refunding Revenue Bonds, Series 2025.
Key Credit Considerations
The rating was assigned because of the following key credit considerations:
Credit Positives
- JTA’s share of Pledged Revenues has comfortably covered debt service, even throughout the pandemic. It is expected that this revenue stream will remain supportive of coverage based on a decline in debt service associated with the refunding, in combination with an expected flat to slight increase in revenues.
- The Bonds have a short average life, with a final maturity on August 31, 2036 (12 years). No additional parity debt is planned to fund the completion of JTA projects, although additional debt is authorized in accordance with the Trust Agreement.
- The population base underpinning the LOGT pledge is growing at a rate comparable to that of the state, and significantly faster than the nation. As population and jobs expand, it is expected that there will be incremental vehicular traffic to support the LOGT base.
Credit Challenges
- Pledged Revenues are vulnerable to shifts in consumption related to fuel price fluctuations, changing driving patterns, and increasingly fuel-efficient vehicles.
- Structural weaknesses in security provisions include the lack of a debt service reserve fund, and the termination of the Interlocal Agreement within 30 days of the final maturity of the Series 2024 and Series 2025 Bonds (although the LOGT itself has been extended to August 1, 2046). This structural shortcoming limits flexibility in the event of a shortfall or delay in deposit of Pledged Revenues
Rating Sensitivities
- Growth in Pledged Revenues that generates increased debt service coverage.
- Potential for debt service coverage declines to a level no longer consistent with the rating level, due to changes in consumption patterns.
To access rating and relevant documents, click here.