NEW YORK Feb 12 Transportation bonds secured by
grants from the U.S. government will suffer this year from
uncertainty stemming from unpredictable federal funding and a
still-tepid economic recovery, Standard & Poor's rating services
said on Tuesday.
The rating agency, which in September revised to "negative"
its outlook on grant anticipation revenue vehicle or GARVEE
bonds, also said that the transportation sector
ratings are expected to remain largely stable. The sector
includes airports, toll roads operators as well as bonds secured
by parking systems, grants, and other facilities.
An extension approved in June 2012 of the Federal Aid
highway program funding through fiscal 2014 will benefit GARVEE
bonds, but "we believe the sector continues to face economic and
financial risks associated with the pace of economic growth and
with the consequences of the ongoing federal deficit and budget
showdowns," Moody's said.
"Particularly the $19 billion of appropriations from the
general treasury, and not from dedicated fuel taxes, contained
in the bill" poses a risk, the rating agency said.
S&P added that another risk posed to the transportation
sector in general comes from growing demand for capital needed
to finance new infrastructure.
According to a recent report by the American Society of
Civil Engineers, the United States needs $2.7 trillion of
infrastructure investment by 2020, but the ASCE estimates that
only $1.6 trillion will be spent, S&P reported.
"The projected gap is mainly in surface transportation ($846
billion), with airports at $39 billion, and ports and waterways
at $16 billion," the rating agency said.