Press Release|Public Finance

KBRA Revises Outlook to Negative for Peninsula Corridor Joint Powers Board Farebox Revenue Bonds; Affirms AA- Rating

25 Jan 2024   |   New York


KBRA revises the Outlook to Negative from Stable for the Peninsula Corridor Joint Powers Board Farebox Revenue Bonds and affirms the long-term rating of AA-.

The revised outlook reflects Caltrain's anemic, post-pandemic ridership recovery coupled with substantial, projected operating cost escalations beginning in FY 2025 following the completion of the Peninsula Corridor Electrification Project (PCEP). The confluence of both circumstances has exacerbated what were already significant, projected out year budget gaps, making it more difficult for the Peninsula Corridor Joint Powers Board (JPB), which operates Caltrain, a single-asset commuter rail system, to craft a financially viable path forward.

Key Credit Considerations

The rating was affirmed because of the following key credit considerations:

Credit Positives

  • Gross lien pledge of farebox revenues provides strong coverage of farebox revenue bonds despite pandemic induced ridership declines.
  • Although not pledged to farebox revenue bond repayment, Measure RR sales tax revenues provide a significant source of revenues to support operations and capital through a slow post-pandemic recovery in ridership.
  • Favorable long-term demographic trends and high income level of population base served are supportive of long-term ridership growth.

Credit Challenges

  • Outyear budget gaps are large reflecting a very weak ridership recovery and large anticipated operating cost escalations following the completion of PCEP later this year.
  • Pandemic-induced ridership declines have been sharp and recovery remains slow, weighing negatively on JPB operations and farebox revenue bond coverage.
  • Potential for further delays and cost overruns in the $2.44 billion electrification project may necessitate additional funding sources.
  • Delays in PCEP reimbursements have pressured liquidity.

Rating Sensitivities

For Upgrade

  • Restoration of ridership to pre-pandemic levels and restoration of trend of long-term ridership growth.

For Downgrade

  • Inability to address outyear budget gaps.
  • Unfavorable developments in ability to manage near-term liquidity or significant further delays and cost overruns in completion of PCEP.

To access rating and relevant documents, click here.



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

About KBRA

Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency 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 by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.

Doc ID: 1003084

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