KBRA Assigns AA+ Rating to the MTA Transportation Revenue Bonds, Series 2020C and Places This Rating on Watch Downgrade

Kroll Bond Rating Agency (KBRA) assigns a long-term rating of AA+ to Metropolitan Transportation Authority (MTA) Transportation Revenue Bonds, Series 2020C, and places this rating on Watch Downgrade.

Concurrently, KBRA affirms the long-term rating of AA+ on the MTA’s outstanding transportation revenue bonds, and also places that debt on Watch Downgrade. KBRA also affirmed the short-term rating of K1+ on the MTA’s outstanding transportation revenue bond anticipation notes (see list below).

• Transportation Revenue Bond Anticipation Notes, Series 2018B Subseries 2018B-1
• Transportation Revenue Bond Anticipation Notes, Series 2018B Subseries 2018B-2
• Transportation Revenue Bond Anticipation Notes, Series 2018C-1
• Transportation Revenue Bond Anticipation Notes, Series 2018C-2
• Transportation Revenue Bond Anticipation Notes, Series 2019A
• Transportation Revenue Bond Anticipation Notes, Series 2019B Subseries 2019B-1
• Transportation Revenue Bond Anticipation Notes, Series 2019B Subseries 2019B-2
• Transportation Revenue Bond Anticipation Notes, Series 2019C
• Transportation Revenue Bond Anticipation Notes, Series 2019D
• Transportation Revenue Bond Anticipation Notes, Series 2019E
• Transportation Revenue Bond Anticipation Notes, Series 2019F

Key Credit Considerations

The rating was assigned and affirmed because of the following key credit considerations:

Credit Positives

• The gross revenue pledge that supports debt service.
• MTA provides a critical transportation network for over 15 million people in the greater New York metropolitan area, which is essential to the economic and social fabric of the region.
• MTA management has a strong track record of balancing its operating budget over changing economic cycles and unforeseen events as well as managing complex capital programs designed to improve and expand the System.

Credit Challenges

• The COVID-19 crisis presents unprecedented challenges to the MTA’s fiscal operations.
• MTA’s high fixed cost structure will continue to challenge its ability to balance operating and capital budgets.
• MTA’s ability to control growth in labor-related costs during the upcoming period of contract negotiations.

Rating Sensitivities

ESG Considerations

When relevant to credit, ESG factors are incorporated into the credit analysis in the same manner as all other credit-relevant factors. Among the ESG factors that have impact on this rating analysis are:

• Discussions in RD 3 and 4 reflect Governance Factors. KBRA considered the MTA’s Regulatory/ Management Framework, financial profiles, and its rate-setting authority as criteria to support ongoing debt service.
• Discussions in RD 1 and 2 reflect Social Factors. KBRA has examined the following areas for this credit: trends in population and demographic changes, income, employment, unemployment, and the potential impact of the COVID-19 crisis.

More information on ESG Considerations for the Public Finance sector can be found here.

To access ratings and relevant documents, click here.

A full report will be forthcoming.

Related Publications

• Coronavirus (COVID-19): MTA and its Bottom Line

Disclosures

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the U.S. Information Disclosure Form located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the U.S. Information Disclosure Form referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

KBRA is a full-service credit rating agency registered as an NRSRO with the U.S. Securities and Exchange Commission. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and is a certified Credit Rating Agency (CRA) with the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.

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