Fitch Rates Triborough Bridge & Tunnel Auth $200MM General Revs, 2006A 'AA'.

NEW YORK -- Fitch Ratings assigns a rating of 'AA' to the $200 million Triborough Bridge and Tunnel Authority, NY (TBTA, or the authority), general revenue bonds, series 2006A, which are expected to sell through negotiation by a UBS Investment Bank led syndicate on or about June 7. Fitch affirms the 'AA' rating on $4.6 billion in outstanding TBTA general revenue bonds and the 'AA-' rating on $2.3 billion in outstanding TBTA subordinate revenue bonds. The Rating Outlook for the general revenue bonds and subordinate revenue bonds is Stable. Bond proceeds will be used to finance bridge and tunnel projects.

The very strong economic value of the TBTA's facilities and the system's significant financial flexibility support the 'AA' rating on the general revenue (senior) bonds and the 'AA-' rating on the subordinate revenue bonds by Fitch. The authority's financial flexibility can be measured both in terms of its balance sheet and operating statement. Coverage of its senior and subordinate bonds is ample on a net revenue basis, and the system produces sizable surpluses that are either reinvested in the TBTA facilities or transferred to the MTA in support of its transit and commuter rail services.

Finances have remained strong and stable throughout New York's various economic cycles as well as the aftermath of the events of Sept. 11. Debt service coverage levels have rebounded since 2002 when the combination of lower net revenues, primarily due to increased security and insurance costs and E-ZPass tag replacement, and higher accrued debt service costs contributed to coverage ratios of 1.89 times (x) against senior debt service and 1.44x against combined senior and subordinate debt service. Reflecting the combined impact of the May 2003 and March 2005 toll increases as well as stable traffic levels since 2002, senior debt service coverage has been more than 3.00x since 2003, while combined senior and subordinate debt service has been more than 2.00x.

TBTA toll revenues grew by 9.8% to $1.2 billion in 2005, due to the aforementioned toll increase, which ranged from 25 cents to 50 cents per one-way crossing. Although the average toll increased by about 11% in 2005, traffic declined less than 1%, demonstrating the authority's strong economic rate-making ability. Operating expenses increased approximately 7.7% in 2005 due to higher pension obligations, major maintenance and bridge painting on the Verrazano-Narrows Bridge. Since 2002, revenues have increased 8.9% annually while expenses have grown at 4.6% annually.

TBTA expects toll revenues to increase by 2.5% to $1.24 billion in 2006 due to the continuing impacts from the March 2005 toll increase. However, expenses are projected to grow nearly 13.1% in 2006 to meet additional costs associated with bridge painting, E-ZPass equipment maintenance, customer service center administration and insurance premium costs. Nevertheless, 2006 senior debt service coverage is still expected to be about 3.0x, while combined senior and subordinate debt service coverage is projected to be 2.0x.

Fitch expects additional debt issuance may slightly erode coverage in the future, although it is likely the TBTA will continue its strategy of periodic toll increases to meet the authority's operating, debt service, and capital needs and to provide sufficient resources to the MTA's transit and commuter rail network. While the significant level of transfers to the MTA could be a risk, all resolution requirements of the TBTA's system are senior to this transfer. In addition, MTA and TBTA's toll rate setting strategy to provide sufficient surplus revenues to the transit and commuter rail system enhances debt service coverage.

The MTA's 2006-2009 financial plan projects the TBTA to continue to generate substantial net revenue to pay debt service, support pay-as-you-go capital, and provide subsidy transfers to the MTA. Fitch expects that the TBTA will continue to raise tolls to meet future projected operating deficits of the MTA. TBTA's $1.2 billion 2005-2009 capital program continues longstanding efforts to provide for the state of good repair and normal replacement of the authority's facilities.

The TBTA is a public benefit corporation placed under the governance of the MTA Board in 1968. The authority's toll facilities include the Triborough Bridge, Verrazano-Narrows Bridge, Bronx-Whitestone Bridge, Throgs-Neck Bridge, Henry Hudson Bridge, Marine Parkway-Gil Hodges Memorial Bridge, Cross Bay-Veterans Memorial Bridge, Brooklyn-Battery Tunnel, and Queens-Midtown Tunnel. In addition, the TBTA owns the Battery Parking Garage.

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