Sept 28 - Fitch Ratings has assigned an underlying 'A' rating to the
Metropolitan Transportation Authority, New York's (MTA) $75 million
transportation revenue variable rate bonds, series 2005E-3 and assigns an 'A'
rating to approximately $250 million of bank bonds corresponding to
transportation revenue variable rate bonds, series 2005E, consisting of $100
million of subseries 2005E-1, $75 million of subseries 2005E-2 and $75 million
of subseries 2005E-3. Fitch also affirms the 'A' rating on the MTA's
approximately $16.8 billion in outstanding MTA transportation revenue bonds. The
Rating Outlook is Stable.
Fitch will be assigning credit enhanced ratings to the series 2005E bonds.
KEY RATING DRIVERS:
--Strategic Importance: The MTA transportation network is essential to the
economy of the New York region, with New York City Transit carrying an average
of 7.1 million daily subway and bus riders and another 590,000 daily commuter
rail passengers. And, while an independent authority, the MTA has received
significant support from the State of New York in the form of additional tax
sources aimed at closing projected operating budget gaps and addressing capital
--Highly Constrained Financial Operations: Despite high debt service coverage
ratios, the MTA's financial position is constrained given its extremely large
operating profile and high fixed costs, including significant retiree pension
benefits. In addition, the MTA's operating subsidies are vulnerable to economic
conditions. However, while politically unpopular, the authority is required to
offset revenue declines to cover operations through service reductions and fare
--Strong Security Pledge: The bonds are secured by a gross lien on a diverse
stream of pledged revenues.
--Extremely Large Capital Needs: The MTA anticipates issuing a total of $10.5
billion in debt to fund the $22.2 billion 2010 - 2014 MTA Capital Program, some
of which has already been issued. The MTA has the constant challenge of
delicately balancing the large rehabilitation and expansion needs of the system
while covering operating expenses and maintaining financial flexibility.
--Growing Annual Debt Burden: The MTA's capacity to continue to leverage
resources to fund expansion projects while meeting renewal and replacement needs
may be limited in the future if projected financial performance does not come to
WHAT COULD TRIGGER A RATING ACTION:
--An unfavorable outcome of the MTA's pending appeal of a recent NY Supreme
Court ruling that deemed the payroll mobility tax (PMT) unconstitutional.
--Inability to achieve operating efficiencies and implement other key elements
of the cost reduction initiatives and/or maintain an ongoing state of good
repair and other elements of the capital program.
--Significant cost overruns or delays in the capital program's mega-projects
that lead to additional borrowing.
--Additional service cuts or deferral of core capital projects that result in
deterioration of key transportation services.
--Deterioration or limited growth in dedicated tax subsidies.
The transportation revenue bonds are primarily secured by a gross lien on the
MTA's operating receipts and subsidies, including: transit and commuter rail
fares and other operating revenues, surplus toll revenues, and certain dedicated
tax sources, state and local operating subsidies, and reimbursements.
TRANSACTION SUMMARY:Tax-Supported Rating Criteria