TEXT-Fitch rates Miami-Dade Expressway Authority revs 'A-'

Thu Feb 28, 2013 5:09pm EST

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Feb 28 - Fitch Ratings assigns an 'A-' rating to Miami-Dade County
Expressway Authority, FL's (MDX) approximately $310 million refunding toll
system revenue bonds, series 2013A. In addition, Fitch affirms the 'A-' rating
on MDX's $1.24 billion outstanding revenue bonds. The Rating Outlook on all
bonds is Stable.

KEY RATING DRIVERS:

Stable Commuter Base With Strategic Importance: The MDX system has a mature
traffic profile of over 237 million annual toll transactions and is a critical
link to the Miami-Dade transportation network. Limited alternative routes
enhance the importance of the system to the region.

Moderate Price Flexibility: MDX currently has moderate toll rates with the last
toll increase implemented in 2006 providing solid economic rate-making ability.
The system focuses on the future tolling of untolled traffic to provide
additional revenue. MDX expects to adopt a toll policy similar to the Florida
Turnpike Enterprise's policy whereby tolls will be indexed to the consumer price
index (CPI). Nevertheless, there are inherent political risks associated with
toll increases especially if economic conditions deteriorate.

Some Exposure to Variable-Rate Debt: MDX's debt portfolio is 81% fixed rate,
with the remainder in variable-rate mode with moderately escalating debt service
profile. The debt service reserve is cash funded at maximum annual debt service
(MADS).

Moderate Leverage and Healthy Financial Metrics: Fiscal year (FY) 2012 net debt
to cash flow available for debt service (CFADS) was 10.2 times (x) and is
consistent with peer facilities. Debt service coverage has historically been
above 1.5x. FY 2012 debt service coverage declined to 1.37x from 1.70x in FY
2011 due to lower than anticipated net toll revenues, higher operating and
maintenance (O&M) growth attributable to increased SUNPASS costs associated with
open road tolling (ORT) and increased debt service requirements.

Good Physical Condition of Assets: MDX has maintained the system and its
facilities in excellent condition. MDX's FY 2013-FY2017 work program is moderate
at $360 million with no long-term debt issuance planned to fund the program. The
plan contains $29.9 million for renewal and replacement to continue system
preservation.

RATING SENSITIVITIES:

--Limited future financial flexibility upon completion of ORT system wide and
tolling previously untolled movements that materially erodes debt service
coverage levels below 1.4x for a three to five year period.

--Management's ability to prudently contain operating and maintenance expense
growth and pass-thru costs (indirect expenses) associated with ORT while
proactively maintaining service levels and successful delivery of MDX's
large-scale capital program. Furthermore, timely toll increases that enhance
financial flexibility and demonstrate and project consistent debt service
coverage ratios above 1.60x may improve credit quality.

SECURITY:

The bonds are secured by a pledge of and lien on the net revenues of the
authority.

CREDIT UPDATE:

MDX is issuing $269 million in refunding revenue bonds, series 2013. The bonds
will be used to refund all of the outstanding 2001A, 2002, and 2004B bonds.
There will be no change to the maturity profile, with the 2013 bonds maturing in
2033. The net present value savings is $29.5 million or approximately 10% (as of
Feb. 1, 2013).

FY 2012 transactions grew to 232.7 million, a 5.7% increase over FY 2011. For
the first four months of FY 2013 (through Oct. 31st) transactions are up 3.2%
while net toll and fee revenues are tracking approximately 4.9% higher than the
same period in FY 2012. MDX currently estimates FY 2013 net toll revenues to
increase to $126.3 million from $122.5 million, or 3.1%.

O&M expenses for FY 2012 increased 10.9%, mainly attributable to higher SUNPASS
pass-thru charges associated with ORT initiatives. FY 2013 O&M expenses through
Nov. 30 are tracking approximately 4.5% under budget. Fitch expects MDX
management will continue to carefully manage costs after finalizing the ORT
initiatives. MDX management has a proven ability to manage expenses and cut
costs during non-expansionary years as demonstrated by significant expense
reductions in FY 2010.

FY 2012 debt service coverage declined to 1.37x due to lower than expected net
toll revenues, O&M growth and higher debt service obligations. Furthermore,
given that no toll increases are planned for FY 2013, MDX management currently
projects debt service coverage to remain relatively flat at 1.41x. Fitch notes
that MDX has prudently incorporated a number of conservative assumptions by
forecasting limited traffic growth. While the projected coverage levels are
lower than peers, Fitch anticipates the planned final implementation of the
remaining two segments of MDX and a toll increase in 2015 will bolster net
revenues and return debt service coverage ratios to historical rates above
1.50x. To the extent that economic conditions worsen impacting traffic growth or
expense growth is not contained financial flexibility may become more
constrained.

Fitch notes that MDX expects to adopt a toll policy similar to the Florida
Turnpike Enterprise's policy whereby tolls will be indexed to the consumer price
index (CPI). Florida's policy stipulates inflationary toll increases may not be
made more frequently than once a year and must be made a minimum of once every
five years. Additionally, rates may be increased higher to meet bond covenants.
Fitch views indexed tolls favorably as it partially limits political risks
associated with toll rate increases. Furthermore, additional near-term revenue
growth is projected to be generated by the new toll collection points. Although
this is a risk to MDX's financial profile, revenues from the toll collection
points are to be generated from an existing traffic base and reflect
conservative traffic diversion assumptions once tolls are in place.

MDX's 2013 - 2017 $360.3 million work program includes 48 projects related to
the design and construction of transportation improvements including the
reconstruction of various lanes and interchange improvements as well as
infrastructure modifications for ORT on the two remaining sections (SR 112 and
SR 836) currently not under an all ORT regime. Additionally, the work program
includes $27.1 million for 17 renewal and replacement projects aimed at system
preservation. While the authority expects no additional debt to finance its work
program, the possibility exists that further leveraging may be required over
near-to-medium term if excess cash flow to fund a portion of the projects is
insufficient and/or the authority faces additional transportation projects and
needs.

MDX was formed in 1994 and is a public instrumentality and agency of the State
of Florida. MDX is responsible for operating, maintaining and improving an
expressway system that currently includes the Airport Expressway (SR-112), the
East-West (Dolphin) Expressway (SR-836), the South Dade (Don Shula) Expressway
(SR-874), the Gratigny Parkway (SR-924), and the Snapper Creek Expressway
(SR-878).

Additional information is available at 'www.fitchratings.com'. The ratings above
were solicited by, or on behalf of, the issuer, and therefore, Fitch has been
compensated for the provision of the ratings.

Applicable Criteria and Related Research:
--'Rating Criteria for Infrastructure and Project Finance' (July 12, 2012);
--'Rating Criteria for Toll Roads, Bridges, and Tunnels' (Aug. 2, 2012).

Applicable Criteria and Related Research
Rating Criteria for Infrastructure and Project Finance
Rating Criteria for Toll Roads, Bridges, and Tunnels
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