Moody's downgrades 27 GARVEE ratings, affects $10 bln in debt
SAN FRANCISCO Nov 14 (Reuters) - Moody's Investors Service said on Wednesday it downgraded 27 GARVEE bond ratings by one notch and revised their outlooks to negative due to increased credit challenges in moves affecting approximately $10 billion in outstanding debt.
The challenges are related to the shorter duration of current highway funding reauthorization and the possibility that more frequent reauthorizations may disrupt or reduce funds available to pay the bonds, Moody's said in a report.
Additionally, Moody's said it concerned about the structural imbalance of the federal Highway Trust Fund that "further increases programmatic risks of GARVEEs," Moody's said.
Tax-exempt GARVEE bonds are backed by annual federal appropriations to assist transportation projects.
Moody's said its action affects 20 ratings of GARVEEs secured solely by a pledge of federal highway aid and seven ratings of mass transit GARVEEs.
Moody's said it also confirmed its 'Aa2' rating of the Arizona Transportation Board's Grant Anticipation Notes and revised their outlook to stable, which "reflects our assessment of additional state funds that the state is legally obligated to apply to the payment of debt service if necessary."
Moody's said it lowered the Ohio Department of Transportation (Major New State Infrastructure Project Revenue Bonds) to 'Aa2' from 'Aa1' and the Alaska Railroad Corporation (Capital Grant Receipts Bonds) to 'A3' from 'A2.'
The rating agency also lowered to 'A1' from 'Aa3' Michigan (Grant Anticipation Bonds - 2007 series), the New Jersey Transportation Trust Fund Authority (Grant Anticipation Bonds)and the New Jersey Transit Corporation (Senior Master Lease Certificates of Participation).
Moody's lowered the following to 'Aa3' from 'Aa2':
* Alabama Federal Aid Highway Finance Authority (Federal Highway Grant Anticipation Refunding Bonds);
* California Department of Transportation (Federal Highway Grant Anticipation Bonds);
* Delaware Transportation Authority (Grant Anticipation Bonds);
* District of Columbia (Federal Highway Grant Anticipation Revenue Bonds);
* Georgia State Road and Tollway Authority (Federal Highway Grant Anticipation Revenue Bonds);
* Idaho Housing and Finance Association (Grant and Revenue Anticipation Bonds Federal Highway Trust Fund);
* Kentucky Asset/Liability Commission (Project Notes, Federal Highway Trust Fund);
* Maine Municipal Bond Bank (Grant Anticipation Bonds);
* Michigan (Grant Anticipation Bonds - 2009 series);
* Montana Department of Transportation (Grant Anticipation Notes);
* New Hampshire (Federal Highway Grant Anticipation Bonds);
* North Carolina (Grant Anticipation Revenue Vehicle Bonds);
* Oklahoma Department of Transportation (Grant Anticipation Notes);
* Rhode Island Economic Development Corporation (Grant Anticipation Bonds);
* Washington (Grant Anticipation Revenue Bonds); and
* West Virginia Commissioner of Highways (Surface Transportation Improvements Special Obligation Notes)
Moody's said it lowered the following to 'A2' from 'A1':
* Chicago Transit Authority (Capital Grant Receipts Revenue Bonds - Section 5309 bonds);
* Chicago Transit Authority (Capital Grant Receipts Revenue Bonds - Section 5307 bonds);
* New Jersey Transit Corporation (Subordinate Master Lease Certificates of Participation);
* Puerto Rico Highway and Transportation Authority (Grant Anticipation Revenue Bonds);
* Southeastern Pennsylvania Transportation Authority (Capital Grants Receipts Bonds); and
* Tri-County Metropolitan Transportation District, OR (Capital Grant Receipt Revenue Bonds).
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