KBRA Affirms AA Rating with Stable Outlook for Southeastern Pennsylvania Transportation Authority Revenue Bonds (Asset Improvement Program)
11 Dec 2023 | New York
KBRA affirms the long-term rating of AA with a Stable Outlook for the Southeastern Pennsylvania Transportation Authority Revenue Bonds (Asset Improvement Program).
Key Credit Considerations
The rating was affirmed because of the following key credit considerations:
- Established track record of effective collection and allocation of the statutorily dedicated funds.
- Motor Vehicle Sales Tax floor applied in PTTF allocation provides downside protection of revenues available for debt service from cyclical fluctuations in taxable motor vehicle sales.
- Authority Allocated Funds cannot be redirected to other uses without legislative action, and SEPTA has covenanted not to requisition Authority Allocated Funds for pay-go purposes until after all amounts due under the Authority Allocated Funds Debt Service Schedules for the full fiscal year have been made.
- Motor vehicle sales tax collections are cyclically volatile, and the insulation provided to the PTTF allocation by the statutory floor will erode over time as annual collections grow.
- Upward rating movement is not anticipated given KBRA’s expectation of increased leveraging of the statutorily dedicated revenue sources.
- Increased leverage of Authority Allocated Funds available for debt service such that prior year revenues provide less than 2.0x MADS coverage.
- Delay or non-approval by Governor of appropriations to the PTTF Asset Improvement Program or cancelation/alteration of the continuing appropriation.
To access rating and relevant documents, click here.