KBRA Affirms A+ Rating, Stable Outlook on State of LA Deepwater Horizon Economic Damages Revenue Bonds (TIFIA)
20 Nov 2025 | New York
KBRA affirms its long-term rating of A+ on the State of Louisiana Economic Damages Revenue Bonds. The Outlook is Stable.
Through the Louisiana State Bond Commission (the “Commission”), and to provide partial funding for the I49 S and LA1/LA415 Projects, the State of Louisiana (the "State") borrowed approximately $86.63 million and $88.34 million, respectively, as the final of seven parity TIFIA loans for Act 443 (the "Act") projects. The cumulative maximum TIFIA borrowing under the Act is approximately $277.3 million. The projects represent three of ten specific transportation projects financed, in part, with approximately $689 million of Damages allocated by the Act. This allocation is drawn from the $1 billion in Economic Damages Claims that BP p.l.c. (BP) is obligated to pay the State through CY 2033 under the aforementioned 2015 Settlement Agreement.
Act 443 obligations are secured solely by approximately $53.3 million of annual Damages through CY 2033. The State does not lend its general obligation pledge as additional security for the Economic Damages Revenue Bonds, and its governmental units are not obligated to levy taxes or make appropriations for payment of debt service. BP Corp North America (“BPCNA”) provides the Primary Guaranty and BP provides the Secondary Guaranty, and final backstop, for payment of Damages (these entities, together with BPXP, are the “BP entities”).
Key Credit Considerations
The rating actions reflect the following key credit considerations:
Credit Positives
- Magnitude of BP’s revenue, cash flow, and liquidity sources relative to BP’s obligation to pay the Damages and other Deepwater Horizon settlements, as well as BP’s vertical integration and ability to shift cash internally.
- Material protection of debt service payments after receipt of Damages by the legal and debt structure, including the first lien pledge and relatively short tenor of the Bonds.
- Public purpose of the Damages to fund key improvements to the State’s transportation infrastructure.
Credit Challenges
- Narrow source of repayment (Damages), which is inextricably linked to the financial wherewithal of BP.
- BP’s financial exposure to decarbonization, somewhat offset by the Bonds’ short tenor and excess debt service coverage based on the currently expected Act 443 debt total and debt service schedule.
The Stable Outlook reflects the well-structured, prescribed nature of the Act 443 revenues and KBRA’s expectation that BP’s large financial scale and flexibility will give it above average capacity to make full payments through the CY 2033 term of the obligations
Rating Sensitivities
For Upgrade
- Sustained improvement in BP’s financial profile – for example, due to successful conversion to cash flow-generating renewable energy.
For Downgrade
- Sustained deterioration in BP’s financial profile, highlighted by inconsistent or weakening cash flow as a result of commodity market volatility, unsatisfactory management of decarbonization, environmental incidents, and/or other factors.
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