Fitch Rates Triborough Bridge & Tunnel Authority $225MM 2007A General Revs 'AA'.

NEW YORK -- Fitch Ratings assigns a rating of 'AA' to the $225 million Triborough Bridge and Tunnel Authority, NY (TBTA), general revenue bonds, series 2007A, which are expected to sell through negotiation by a Lehman Brothers led syndicate on or about June 12. In addition, Fitch affirms the $4.7 billion in outstanding TBTA general revenue bonds at 'AA' and the $2.3 billion in outstanding TBTA subordinate revenue bonds at 'AA-'. 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. 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. 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 3x since 2003, while combined senior and subordinate debt service has been more than 2x. Senior and subordinate debt service coverage in 2006 remained strong at 3.06x and 2.02x, respectively, however, slightly lower than 2005, reflecting lower growth in toll revenues and higher operating and maintenance costs coupled with higher debt service payments.

TBTA toll revenues grew by 3% to $1.24 billion in 2006 due to continuing impacts from the aforementioned March 2005 toll increase, which ranged from 25 cents to 50 cents per one-way crossing. While the average toll increased by 14% with the most recent rate adjustment, traffic increased by 0.6% in 2006 and have nearly recovered the prior year's loss, demonstrating the authority's strong economic rate-making ability. Operating expenses grew modestly in 2006 at 2.7%, reflecting the combination of higher pension obligations, salaries and wages and health benefits. Since 2002, revenues have increased 7.4% annually while expenses have grown at 4.1% annually.

TBTA expects toll revenues to remain generally flat in 2007 reflecting limited traffic growth and no toll increases. However, expenses are projected to grow more than 15% in 2007 to meet additional costs associated with bridge painting, E-ZPass equipment maintenance and E-ZPass customer service center contracts. Fitch expects the combination of those factors will likely result in senior debt service coverage at about 2.8x and combined senior and subordinate debt service coverage at approximately 1.9x. Year to date data through March indicate that toll revenues are slightly above budget, while expenses are at around the authority's estimates.

The MTA's 2007-2010 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 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. While TBTA has been proactive in increasing tolls, Fitch notes, similar to other toll entities, toll increases are subject to political risks.

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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