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MARYLAND DOT $332.8 MILLION CONSOLIDATED TRANSPORTATION 'AA' BY FITCH -- FITCH FINANCIAL WIRE --

 NEW YORK, Dec. 1 /PRNewswire/ -- The Department of Transportation of Maryland's $332.8 million consolidated transportation bonds, refunding Series 1993 (second issue) are rated `AA' by Fitch. The bonds will be sold competitively Dec. 8. Dated Dec. 15, 1994, the bonds mature Dec. 15, 1994-2005, and are callable at 101% beginning Dec. 15, 2002. This issue advance refunds $291.4 million of the 1989 series, 1990 series, and 1990 series (second issue) bonds. The $699 million in outstanding `AA' parity debt is affirmed. The credit trend is stable.
 Credit strength lies in the department's broad revenue base and area of control. The department is responsible for all aspects of the state- owned transportation network and has the ability to do comprehensive capital planning and channel available revenues where needed. Security for the bonds consists of certain pledged taxes as well as available department revenues if the taxes are insufficient to provide for debt service. Pledged revenue consists of portions of the motor fuel, motor vehicle titling, and corporate income taxes. Pledged revenue performance has been weak since fiscal 1989, partly reflecting the general trends of highway related revenues as well as overall economic decline, which has been longer and more severe in Maryland than anticipated. In response, certain fees were increased and in May 1992 the gas tax was increased by 5 cents, thereby raising pledged revenue and debt service coverage. In addition to pledged revenue, other resources available for debt service include motor vehicle registration fees and an additional portion of the corporate income tax, as well as net revenue from facilities' operations, providing an additional amount equal to more than 60% of the pledged revenue.
 Coverage of projected maximum annual debt service ($136 million in 1998 following refunding) from actual pledged taxes in fiscal 1993 is strong at 4.7x including this issue. Overall revenue from department taxes and operations after payment of estimated operating expenses covers estimated maximum debt service a sound 3.2x. Projected debt service coverage, based on reasonable economic assumptions, continues to be strong despite additional borrowings to be issued through fiscal 1999. The additional bonds test is strong, requiring both historic department net revenue and pledged taxes each to cover future maximum annual debt service 2.0x. Department policy is to keep coverage at a 2.5x minimum.
 The state's overall economic weakness placed pressure on the finances, and transfers were made from unpledged department funds to the state general fund; $22.2 million in 1991; $48 million in 1992, and $18.8 million in 1993. While the transfers do not impinge on bond security since they are not made from pledged revenues, they reduce the availability of overall department resources. Earlier this year, the general assembly enacted legislation requiring the general fund to repay the transportation fund $21 million in each of fiscal 1997 and 1998.
 -0- 12/1/93
 /CONTACT: Claire G. Cohen, 212-908-0552, or Ruth Corson Maynard, 212-908-0596, both of Fitch/


CO: Maryland Department of Transportation ST: Maryland IN: SU: RTG

CK -- NY126 -- 9533 12/01/93 18:29 EST
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Publication:PR Newswire
Date:Dec 1, 1993
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