Fitch Rates Oklahoma Turnpike Authority 2007A Bonds 'AA-'; Outlook Stable.

NEW YORK -- Fitch Ratings assigns an underlying 'AA-' rating to the Oklahoma Turnpike Authority's (the authority) $47.5 million series 2007A fixed-rate refunding second senior revenue bonds. In addition, Fitch affirms the outstanding 'AA-' rating on the $636 million outstanding second senior revenue bonds. The series 2007A bonds will refund portions of the authority's outstanding revenue bonds. The Rating Outlook on all bonds is Stable. The series 2007A bonds will be sold on or around May 22, 2007 via a syndicate led by BOSC, Inc. The bonds are also expected to be insured by a financial insurer whose insurer financial strength is rated 'AAA' by Fitch.

The authority's 'AA-' rating reflects the system's stable base of traffic, healthy financial performance, and conservative fiscal practices and policies. The availability of motor fuel excise taxes (MFET) to meet debt service requirements on all bonds, if needed, also adds to the authority's credit strength. 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. 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 from 1983 to 2006, and a 3% increase in fiscal year 2006 over the prior year. Data for the first quarter of 2007 shows a 2% decline on the prior quarter, in large part due to heavy winter storms which closed portions of the turnpike for several days in January. Data for the months of February and March 2007 show increases of increases of 1.2% and 2.7% over the same months the prior year. With the exception of a decline in 1974 due to the oil embargo, the system demonstrates little volatility due to economic cycles and it is Fitch's expectation that traffic will grow at a rate between 3% and 5% for fiscal year 2007.

Financial performance is strong, providing ample debt service coverage on existing bonds as well as funding for ongoing significant capital needs. For fiscal year 2006, net system revenues, excluding MFET, provided approximately 1.59 times (x) coverage on all outstanding bonds. MFET collections totaled $41 million in fiscal year 2006 and increased total coverage to 2.04x, 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 use in the event of a debt service shortfall. Amounts not needed for debt service are transferred to the state department of transportation. Since the enabling legislation was changed in 1992, the authority has never needed to use its MFET apportionment to pay debt service.

The authority's current capital improvement program (CIP) projects $361 million in cash-funded spending over the next five years (2007-2011), 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 of the Will Rogers Turnpike and implementation of electronic payment systems at several state airports. 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. In addition, besides approval of the authority's board (a geographically diverse constituency), issuance of bonds does require 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. Further, the state's manageable growth pattern helps to temper capital and borrowing needs.

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.