Moody’s revises outlook on NYS Thruway Authority to positive

Moody’s Investors Service revised the New York State Thruway Authority’s outlook to positive from stable on Thursday.

Moody’s also affirmed the A1 rating on the authority’s $3.2 billion of outstanding general revenue bonds and the A2 rating on the $2.5 billion of outstanding general revenue junior indebtedness obligations.

Additionally, Moody’s assigned an A1 rating to NYSTA’s proposed $1.1 billion of Series P general revenue bonds.

Moody’s said its outlook revision “is driven by the recently approved multi-year toll increase for the 2024-2027 period, which will support the authority’s financial strength and extensive capital plan.

“The ratings affirmation and ratings assignment reflect the current uncertainty on the authority’s leverage profile given the ongoing legal dispute with the constructor of the Gov. Mario M. Cuomo Bridge,” Moody’s said.

The rating agency noted its positive outlook also recognizes the current capital investment plan of about $2.4 billion for the 2024-2028 period.

“Now that the construction of the Gov. Mario M. Cuomo Bridge has been completed on time and within budget, the updated CIP only includes standard maintenance works that do not pose significant complexity or cost overrun risk,” Moody’s said.

“Approximately 53% of the updated CIP will be debt financed, which will result in a ratio of adjusted debt to operating revenue of about 6.1 times in average over the next five years. While the anticipated leverage is relatively high, it is in line with similarly rated peers of comparable size and it reflects the extensive capital needs of large-scale assets,” according to Moody’s.

At the same time, Moody’s said its rating affirmations acknowledges the authority is currently facing a dispute with Tappan Zee Constructors LLC, the contractor of the bridge, who claims it is owed about $1.3 billion in excess of the approved contract value.

“An adverse outcome of the dispute could result in additional debt beyond the amounts planned for the current financing plan,” Moody’s said. “The ratings affirmation recognizes that the authority’s long term debt service profile has room to incorporate additional debt, but also reflects the limited visibility on the authority’s leverage profile until there is more certainty on the outcome of the dispute.”

Moody’s said factors that could lead to an upgrade of the ratings include a limited impact of the bridge dispute on the authority’s leverage profile and that Moody’s net revenue debt service coverage ratios consistently exceed 2.0 times for senior bonds and 1.5 times for all debt service.

Moody’s said factors that could lead to a downgrade of the ratings include additional debt issuances or revenue declines that lead to sustained net revenue DSCR below 1.55 times for senior bonds and 1.35 times for all debt service and consistently higher adjusted debt to operating revenue ratio exceeding 7.5 times, or political interference that leads to meaningful changes in the current financial plan or failure to implement planned toll increases necessary to produce projected debt service coverage levels.