MOODY'S LOWERS RATING ON NEW YORK MTA TRANSIT FACILITIES; NEW YORK CITY TRANSIT AUTHORITY REVENUE BONDS TO 'Baa' FROM 'Baa1'
MOODY'S LOWERS RATING ON NEW YORK MTA TRANSIT FACILITIES; NEW YORK CITY TRANSIT AUTHORITY REVENUE BONDS TO 'Baa' FROM 'Baa1' NEW YORK, April 14 /PRNewswire/ -- Effective today, Moody's Investors Service has lowered the rating on the New York Metropolitan Transportation Authority's Transit Facilities (NYCTA) Revenue Bonds to 'Baa' from 'Baa1'. The rating revision also applies to the MTA's Transit Facilities (NYCTA) adjustable rate revenue obligations, Series 1987 and Refunding Series 1986, which are parity with the revenue bonds. At the same time Moody's has confirmed the 'Baa 1' rating on the MTA's commuter facilities adjustable rate revenue obligations, Series 1987 and Refunding Series 1986. The transit facilities revenue bonds are secured by revenues and certain state and city operating subsidies received by the MTA's transit subsidiary, the New York City Transit Authority. Despite successful actions to control and even reduce operating costs, the NYCTA has faced growing financial pressures in recent years. Recession-driven drops in both ridership and tax-supported subsidies, as well as cuts in state and city general appropriation subsidies, have caused operating revenues and subsidies to fall significantly short of operating costs in each of the last three years. Rather than make up these shortfalls entirely through fare increases, the authority has chosen to meet bond covenant and statutory requirements to maintain cash balance through a series of one- shot measures, including the acceleration of subsidy payments and the refinancing of debt. As a result of the state's failure to approve the reallocation of $90 million in accumulated funds from the commuter railroads to the NYCTA, the MTA now plans to close a $71 million gap in the NYCTA's current year budget with notes to be repaid from fiscal 1993 federal operating subsidies. In revising the rating, Moody's said, "The recurring use of one-shot actions and the political difficulty of raising fares weaken the effective security provided by the rate covenants. Plans for the current fiscal year essentially represent a deficit financing and may require that such borrowings become a necessity in futures years' budgets. These factors, combined with increased exposure to the state and city's own strained budget processes and uncertainty surrounding the funding for needed capital improvements, result in the rating revision. The commuter facility revenue obligations are secured by revenues and certain operating subsidies received by the Long Island and Metro North Commuter Railroads. Although the commuter facilities are potentially subject to the same financial and political pressures as the transit facilities, recent financial performance has been more positive due to more stable ridership trends and favorable formulas for the allocation of operating subsidies. Relatively more moderate capital needs for the commuter railroads also contribute to the stability of the rating. Uninsured Debt Outstanding: Transit Facilities: Approximately $1.5 billion Commuter Facilities: Approximately $250 million -0- 4/14/92 /CONTACT: Kenneth Kurtz, 212-553-0834, Michael Johnston, 212-553-7810, or Jeffrey F. Rizzo, 212-553-0354, all of Moody's Public Finance Department/ CO: New York Metropolitan Transportation Authority ST: New York IN: TRN SU: RTG
KD-AH -- NY081 -- 8402 04/14/92 17:50 EDT
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|Date:||Apr 14, 1992|
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