Press Release|Public Finance

KBRA Downgrades Peninsula Corridor Joint Powers Board Farebox Revenue Bonds to A+, from AA-; Revises Outlook to Stable

23 Jan 2025   |   New York

Contacts

KBRA downgrades the long-term rating for the Peninsula Corridor Joint Powers Board Farebox Revenue Bonds to A+, from AA-. The Outlook is revised to Stable.

The rating downgrade reflects large projected budget gaps arising because of Caltrain’s slow post-pandemic ridership recovery and significantly increased operating expenses following the substantial completion of the Peninsula Corridor Electrification Project (PCEP) in September 2024. Reserves and non-recurring state operating assistance will cover most operating needs through FY 2026, but anticipated gaps grow to around a quarter of resources available for operations in FY 2027 and will grow thereafter in the absence of a new funding source.

Key Credit Considerations

The rating action reflects the following key credit considerations:

Credit Positives

  • Gross lien revenue pledge providing strong coverage of Farebox Revenue Bonds despite pandemic induced ridership declines.
  • Favorable long-term demographic trends and high income level of population base serve to support long-term ridership growth.

For Downgrade

  • Outyear budget gaps are large, reflecting weak ridership recovery and large anticipated operating cost escalations following the September 2024 substantial completion of PCEP.

Rating Sensitivities

For Upgrade

  • Dedication of a new recurring funding source that will restore structural balance to operations.

For Downgrade

  • Inability to materially address outyear budget gaps.
  • Unfavorable developments in ability to manage near-term liquidity.

To access ratings and relevant documents, click here.

Methodologies

Disclosures

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA), one of the major credit rating agencies (CRA), is a full-service CRA registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a Designated Rating Organization (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan’s Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.

Doc ID: 1007715

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