KBRA Assigns AA+ to San Francisco Bay Area Rapid Transit District's Senior Sales Tax Revenue Bonds and AA Junior Sales Tax Revenue Bonds Series 2024-A and 2024-B TIFIA Loan; Stable Outlook
7 Oct 2024 | New York
KBRA assigns a long-term rating of AA+ to the San Francisco Bay Area Rapid Transit District, CA's ("the District") outstanding Senior Lien Sales Tax Revenue Bonds. In addition, KBRA assigns a long-term rating of AA to the District's Junior Lien Sales Tax Revenue Bonds, Series 2024-A and Series 2024-B TIFIA loans. The rating Outlook is Stable.
The ratings reflect the District's gross revenue pledge with collections by the California Department of Tax and Fee Administration (CDTFA), a broad sales tax revenue base, continued favorable sale tax revenue trend, and strong historic and proforma debt service coverage (DSC), both for the senior and junior lien obligations. The ratings also recognize the underlying strength of the metropolitan San Francisco economy, which benefits from high wealth levels and a diverse commercial/industrial base.
Key Credit Considerations
The ratings were assigned because of the following key credit considerations:
Credit Positives
- Pledged Sales Tax Revenues provide ample pro forma coverage of maximum annual debt service (MADS) requirements for the sales tax revenue bonds and the junior lien TIFIA loans.
- Sales tax generated by sizable, diverse, and resilient economic base.
- Gross revenue pledge with sales taxes collected by CDTFA and directly deposited with Trustee.
Credit Challenges
- Bonds are solely secured by sales taxes, which may at times be adversely affected by economic factors.
- Although unlikely, possible legislative or electorate changes to the transactions and items subject to the State’s general sales tax.
Rating Sensitivities
For Upgrade
- Sustained favorable sales tax revenue trend and absence of prior obligation borrowing that narrows debt service coverage levels.
For Downgrade
- Significant secular economic downturn or material outmigration that results in sharp reductions in pledged Sales Tax Revenues and debt service coverage.
To access rating and relevant documents, click here.