Fitch Rates New York & New Jersey Port Authority's $300MM Consolidated Bonds 'AA-'; Outlook Stable.NEW YORK New York, state, United States
New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- Fitch Ratings Fitch Ratings
An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. assigns an 'AA-' underlying rating to the Port Authority of New York and New Jersey's (the authority) $300 million of consolidated bonds, series 160. The bonds are expected to price competitively on or around Sept. 16, 2009 and have a final maturity of 2039. Consolidated bonds and notes are secured by net revenues of the authority and a pledge of the general reserve and consolidated bond reserve funds. Bond proceeds will be used to support capital projects of the authority.
Fitch has also affirmed the underlying ratings on the following authority bonds:
--$11.78 billion consolidated bonds at 'AA-';
--$311.6 million versatile structure obligations series 1R, 3, 4 and 6 at 'A+'.
The Rating Outlook on all outstanding debt is Stable.
The authority's ratings reflect the demand for New York/New Jersey-based travel, supported by the region's diverse economy and status as a global center of commerce; the authority's expansive, diverse portfolio of transportation and commerce-related assets; institutionalized in·sti·tu·tion·al·ize
tr.v. in·sti·tu·tion·al·ized, in·sti·tu·tion·al·iz·ing, in·sti·tu·tion·al·iz·es
a. To make into, treat as, or give the character of an institution to.
b. practices and fiscal conservatism; consistently healthy financial performance and debt service coverage, bolstered by the cost recovery nature of the airport use agreements, cost containment cost containment,
n the features of a dental benefits program or of the administration of the program designed to reduce or eliminate certain charges to the plan. strategies, and timely toll increases; significant balance sheet liquidity, and the authority's demonstrated ability to manage operations and an expansive capital plan simultaneously.
The primary credit concern remains the potential for increased leverage and reduced liquidity as a result of the authority's very large financial commitments for the improvement and expansion of its existing assets, along with developments at the World Trade Center (WTC WTC World Trade Center, see there ) site and the Access to the Region's Core Project (ARC). The latter two commitments are currently budgeted at $9.5 billion and $3 billion, respectively, and are part of the authority's overall $29.5 billion 2007-2016 capital plan. The authority currently estimates that approximately 40% of the total capital plan will be debt funded and remaining funding sources will be provided by direct investment of the authority's funds; however, the current capital plan is under review for possible deferment deferment Delaying of an obligation. See Default, Medical student debt. Cf Forbearance. of certain individual projects given current economic conditions and resultant effects on business lines. Based on the financial impact of the recession on revenues, the authority may reduce the total capital plan to $26 billion. It is Fitch's expectation that the authority will continue to adjust its capital and to a lesser degree, operating plans, to maintain debt service coverage at or above 2.0 times (x). Should depressed revenue trends continue, financial metrics and debt service coverage could be strained.
The authority's capital plan and budget already assumes a reasonable increase in debt-supported capital investment, and toll and fare increases were implemented on March 2, 2008, yielding approximately $312 million in additional revenue per year.
An ongoing and recently elevated risk is the authority's involvement with redevelopment of the WTC site. Year-to-date, the authority has experienced substantial challenges in connection with its rebuilding efforts, resulting in large increases in liquidated damages Monetary compensation for a loss, detriment, or injury to a person or a person's rights or property, awarded by a court judgment or by a contract stipulation regarding breach of contract. (LDs). Although the authority recently met its obligations in turning over sites for Tower 2, 3, and 4, it incurred $140 million in LDs due to Silverstein Properties Inc. (SPI (1) (Stateful Packet Inspection) See stateful inspection.
(2) (Service Provider Interface) The programming interface for developing Windows drivers under WOSA. ) - significantly higher than the $29 million included in the 2009 budget. Subsequently, SPI filed an arbitration notice against the Port Authority citing negligent misrepresentation misrepresentation
In law, any false or misleading expression of fact, usually with the intent to deceive or defraud. It most commonly occurs in insurance and real-estate contracts. False advertising may also constitute misrepresentation. and/or fraud and is seeking monetary damages of approximately $2.75 billion. Should the outcome of the arbitration rule in favor of SPI, the authority's financial margins could be pressured given its prominent role in regional economic development and execution of its $29.5 billion capital plan. Fitch will continue to monitor the ongoing WTC rebuilding efforts and expects the authority to adjust its capital plan should it encounter increased construction costs, delays, and/or monetary damages. Yet, Fitch notes the authority's considerable reserve balances, representing approximately 22% of senior bonds and notes outstanding. The arbitration is expected within the close of 2009.
In light of the current U.S. and global economic downturn and the unknown duration, Fitch believes it may be necessary for the authority to prioritize core capital projects, increase revenue streams, and defer non-essential capital projects in order to maintain healthy financial margins. Year to date, revenues generated from passengers at the authority's airports is up approximately 3.5% when compared through June 2008, interstate tolls and rail revenue is up 15%, and port revenues are essentially flat. Operating expenses Operating expenses
The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. are near the authority's projection, growing by only 3.5% when compared through June 30, 2008. However, overall activity levels are down and below budget for the current year. Total passenger activity at the authority's airports is down 5% below plan and container cargo activity has dipped 27% below plan. Vehicular traffic at the tunnels and bridges is virtually on target with the 2009 budget assumptions. In order to counteract these negative trends and preserve net income, hiring freezes and attrition practices are in place, reductions in certain non-essential contracted services have been executed, a voluntary severance program was implemented, and a portion of capital spending capital spending
Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. for 2009 has been delayed. Other revenue generating measures include mid-year airport parking rate adjustments at EWR EWR Europäischer Wirtschaftsraum (German: European Marketing Area)
EWR Early Warning Report
EWR Early Warning Radar
EWR Extreme Warfare Revenge (game)
EWR Electricity at Work Regulations , JFK, and LGA LGA
large for gestational age
LGA Large for gestational age, see there .
The authority showed healthy operating performance in 2008, supporting solid coverage of debt service carrying charges Payments made to satisfy expenses incurred as a result of ownership of property, such as land taxes and mortgage payments. Disbursements paid to creditors, in addition to interest, for extending credit.
Consumer Protection laws require full disclosure of all carrying charges. , reinvestment in facilities, and accumulation of reserves during the year. Net revenues (excluding WTC Sept. 11 revenues) of approximately $1.94 billion provided 3.46x debt service coverage. Net revenues in 2009 of approximately of $1.9 billion, including insurance proceeds and other non-operating income, are expected to provide debt service coverage in excess of 2.0x. In 2008, despite incurred liquidated damages expenses, net operating income Operating Income
The profit realized from a business' own operations.
This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. increased by approximately $220 million, capturing higher tolls and fare revenues, increased rental revenues from major aviation and port facilities, and higher aviation fees from cost recovery agreements with airlines operating at LGA, JFK, and EWR. The authority's total reserve fund balances, including the general reserve and consolidated bond reserve fund increased to $2.39 billion during 2008, representing 22% of the authority's senior bonds and notes outstanding. The authority expects its solvency position to remain strong throughout 2009, with reserves projected to reach $2.5 billion by the end of its fiscal year.
In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. 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 Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site.