Fitch Affirms Oklahoma Turnpike $530.8MM Refunding Rev Bonds, Series 2006B-F 'AA-/F1+'.

NEW YORK -- Effective March 27, 2008, Fitch Ratings confirms a rating of 'AA-/F1+' to the Oklahoma Turnpike Authority, Oklahoma Turnpike System refunding second senior revenue bonds (variable rate bonds), consisting of:

--$106,160,000 series 2006B;

--$106,160,000 series 2006C;

--$106,160,000 series 2006D;

--$106,160,000 series 2006E;

--$106,160,000 series 2006F.

The review was undertaken in connection with termination of the municipal bond insurance policy provided by XL Capital Assurance Inc. and delivery of a substitute liquidity facility in the form of a standby bond purchase agreement (SBPA) to be provided by Lloyds TSB Bank plc, acting through its New York Branch, Fortis Bank S.A./N.V., acting through its Connecticut Branch, and Banco Bilbao Vizcaya Argentaria S.A., acting through its New York Branch, to support the above-captioned bonds, effective March 27, 2008.

The long-term 'AA-' rating assigned to each series of second senior revenue bonds will be based on the credit quality of the authority. The authority's 'AA-' rating reflects the system's stable base of traffic, healthy financial performance, and conservative fiscal practices and policies, and the authority's capability to fund capital expenditures with available cash resources. In addition, the availability of motor fuel excise taxes (MFET) to meet debt service requirements provides bondholders extra protection in the event of shortfall. Other important credit considerations include the authority's competitive position, significant rate-making flexibility, and strong legal framework. Credit concerns center on the potential for expanded transportation projects to compete for system resources; however, the authority's strong rate-making flexibility, tenured management, and fiscally conservative policies partially mitigate this risk.

The system's traffic base is mature and stable, exhibiting 7% growth on average annually from 1983 to 2007. In 2007 traffic increased steadily; total transactions were up 5% over the previous year capturing the substantial traffic growth in urban areas of the state. Available data for 2008 shows stable traffic patterns on older segments of the turnpike, and 11% traffic growth on the Creek, Chicksaw, and Kilpatrick turnpikes, all of which mimic the functionality of the older turnpikes but also serve as regional connectors to the cities of Tulsa and Oklahoma City. With the exception of a decline in 1974 due to the oil embargo, the system has demonstrated little volatility due to economic cycles. It is Fitch's expectation that traffic will grow at a rate between 3%-5% in the near term, slightly below the historical growth average.

Financial performance is strong, providing ample debt service coverage on existing bonds as well as funding for ongoing significant capital needs. For fiscal year 2007, net system revenues, excluding MFET, provided approximately 1.62 times (x) coverage on all outstanding bonds. MFET collections totaled $41.5 million in fiscal year 2007 and if included, increases total debt service coverage to 2.08x, comparable with prior years. Existing state legislation authorizes the monthly apportionment to the authority of 97.5% of the MFET on the total gallonage of all fuels consumed on turnpike projects for debt service use in the event of a shortfall. However, since the enabling legislation was passed in 1992 the authority has never used the MFET monies, which are then immediately transferred to the Oklahoma Department of Transportation (ODOT).

The authority's current capital improvement program (CIP) projects $338 million in cash-funded spending over the next five years (2008-2012), a figure consistent with prior five-year plans. The CIP focuses on resurfacing and rehabilitation projects intended to maintain the system in good working order. The authority has no current plans for debt-funded construction projects but is exploring the possibility of additional capital projects beyond 2011, including widening one of the oldest turnpikes (the Will Rogers Turnpike), and serving as the provider of electronic payment systems at several state airports, and additional parking facilities. Additionally, the authority has the legal ability to finance and operate turnpike projects and other transportation-related assets throughout the state.

While additional system leverage beyond 2011 for such projects is a possibility, historical willingness to raise tolls when needed, as well as bond legal provisions, helps to ensure that debt service coverage consistent with the current rating level should be maintained. Furthermore, in addition to approval of the authority's board (a geographically diverse constituency), issuance of bonds requires approval from the Executive Bond Oversight Commission and the Legislative Bond Oversight Commission. The long, staggered terms of board members and the executive and legislative oversight serve to provide additional checks and balances. The state's manageable growth pattern also helps to temper the authority's capital and borrowing needs.

The authority is an entity of the state created by Oklahoma statutes in 1947. Initially authorized to construct the Turner Turnpike, connecting Oklahoma City and Tulsa, the authority's role was subsequently expanded to include projects throughout the state. The authority currently owns and operates 10 turnpikes throughout Oklahoma.

The short-term 'F1+' rating assigned to each series of bonds will be based on the support of a substitute standby bond purchase agreement (SBPA), severally provided by Lloyds TSB Bank plc, acting through its New York Branch, Fortis Bank S.A./N.V. acting through its Connecticut Branch, and Banco Bilbao Vizcaya Argentaria S.A., New York Branch. Lloyds TSB Bank plc, acting through its New York Branch, is acting as an agent bank pursuant to the SBPA. The SBPA provides for the payment of the purchase price of tendered bonds during the daily and weekly interest rate periods. The SBPA is sized to cover the principal portion of the purchase price and 34 days of interest at the maximum rate of 12%, based on a year of 365/366 days. The SBPA will expire on the initial stated expiration date of March 26, 2009, unless such date is extended, or upon the occurrence of other events of termination, as specified in the SBPA.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.