Fitch Rates Port Authority of New York & New Jersey's $350MM VSO Series 7 'A+'; 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 'A+' rating to the Port Authority of New York and New Jersey's (the authority) $350 million of versatile structure obligations (VSO VSO (in Britain) Voluntary Service Overseas VSO n abbr (BRIT) (= Voluntary Service Overseas) → organización que envía jóvenes voluntarios a trabajar y enseñar en los países del Tercer Mundo ) series 7. The bonds are expected to price on or about July 18, 2007. Bond proceeds will retire the outstanding $350 million consolidated notes, series XX and YY. In addition, Fitch affirms the ratings and the following outstanding debt of the authority: --$9.4 billion consolidated bonds at 'AA-'; --$350 million consolidated notes at 'F1+'; --$519.6 million versatile structure obligations at 'A+/F1+'. The VSO's series 7 are secured by the subordinate net revenues of the authority after any required deposits to general reserve fund. All VSO series save the series 7 are secured by a subordinate lien on net authority revenues in addition to several bank standby certificate purchase agreements. The Rating Outlook is Stable. The authority's ratings reflect the demand for New York/New Jersey-based travel, supported by the region's expanding 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 1. a. To make into, treat as, or give the character of an institution to. b. practices and fiscal conservatism Fiscal conservatism is a political phrase term used in the United States to attack government spending and advocate instead lower spending and a lower federal debt; it may also include higher taxes in order to lower the debt. ; consistently healthy financial performance and debt service coverage, bolstered by the cost recovery nature of the airport use agreements, management cost control, timely toll increases; and significant balance sheet liquidity. The primary credit concern remains the potential for increased financial leverage and reduced liquidity as a result of the authority's very large financial commitments made 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 Trans-Hudson Express Tunnel This article or section contains information about a planned or expected future tunnel. It may contain information of a speculative nature and the content may change as the construction or completion of the tunnel approaches, and more information becomes available. Project (THE). The latter two commitments are currently budgeted for as part of the authority's overall $26.1 billion 2007-2016 capital program, and are expected to be largely offset by third party funding sources. Government grants, insurance proceeds, and separately secured financings are expected to limit the burden of these commitments on the authority's consolidated bond credit. In the absence of these important offsets, the risk remains that the authority, given its prominent role in lower Manhattan Lower Manhattan is the southernmost part of the island of Manhattan, the main island and center of business and government of the City of New York. Lower Manhattan is generally defined as the area delineated on the north by Chambers Street, on the west by the Hudson River (North redevelopment and in regional transportation coordination, could be responsible for funding increased portions of the overall costs for both projects. Should this occur, significant additional consolidated bond debt and a toll rate increase at the authority's vehicular crossings cannot be ruled out. Currently, the authority's capital plan assumes a modest increase in debt supported capital investment and no toll rate increase. Fitch recognizes that the authority maintains significant economic rate-making flexibility at its various enterprises, including the airports, bridges and tunnels, providing the means to raise revenues to support new debt and rebuild liquidity, if needed. The operations of three metropolitan New York and New Jersey airports, the authority's primary revenue generating assets, have long been relied upon to support capital investment and subsidize non-income generating assets required as a result of the authority's broad mission. The ability of the airports to continue subsidizing non-self-supporting endeavors will become increasingly challenged, particularly as such excess income will be required to support terminal redevelopment projects and other on-going capital investment at the various airports. Continued healthy operating performance at the close of 2006 supported solid coverage of debt 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 Reinvestment Using dividends, interest and capital gains earned in an investment or mutual fund to purchase additional shares or units, rather than receiving the distributions in cash. 1. In terms of stocks, it is the reinvestment of dividends to purchase additional shares. in facilities, and accumulation of reserves during the year. Net revenues of approximately $1.5 billion provided 2.3 times (x) coverage of 2006 principal and interest, with approximately $694.2 million of excess revenues added to authority reserves. Preliminary budget figures indicate that operating performance could decline slightly during 2007 (26% operating ratio Operating Ratio A ratio that shows the efficiency of management by comparing operating expense to net sales: ), while coverage remains at or just above 2x. Fitch recognizes the authority is typically conservative in its forward projection of revenues and expenditures, and as such, budgeted 2007 operating metrics may be somewhat understated. The authority's total reserve fund balances including the general reserve and consolidated bond reserve fund increased to $1.77 billion during 2006, representing a solid 18% of pro-forma consolidated bonds and notes (including the 147th series). Reserve levels are budgeted to remain relatively flat in 2007 as available net revenues will be applied to support $2.5 billion in planned capital investment. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. 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. |
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