Press Release|Public Finance
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:
Credit Positives
- 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.
Credit Challenges
- 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.
Rating Sensitivities
For Upgrade
- Upward rating movement is not anticipated given KBRA’s expectation of increased leveraging of the statutorily dedicated revenue sources.
For Downgrade
- 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.