Moody’s Investment Service today kept the A1 bond rating for the state Thruway Authority, but followed S&P and dropped the authority’s outlook from stable to negative.
Moody’s said that the Thruway would need to increase tolls on truck traffic even higher than the 45 percent proposed to maintain its debt service coverage ratio (DSCR).
“Implementation of substantial additional toll increases beyond the 45 percent will be required to maintain targeted DSCRs,” Moody’s wrote in its report
The report cites the uncertain financing plan for the new $5 billion Tappan Zee Bridge between Rockland and Westchester counties.
“The negative outlook speaks to an as yet uncertain finance plan for the new Tappan Zee bridge and risks associated with the execution and management of a design-build contract and the environmental permitting and financing requirements for this very large and complex construction project,” the report reads. “The bridge is an essential Hudson River crossing that connects Rockland and Westchester Counties north of New York City. The bridge is a keystone of the system and provides nearly 19.5% of toll revenues.”
Moody’s warns that construction delays and the debt that would be associated with the project “would place negative pressure on the rating. Similarly, changes in customer behavior in response to the significant toll increases that will be necessary to support the substantial increase in leverage would exert pressure on the rating.”
Still, Moody’s applauds the Thruway Authority’s proposal to increase tolls on truck traffic by 45 percent.
“The rating is based on our expectation that approved toll increases will be implemented as needed to maintain targeted DSCRs as the project and the authority’s CIP are debt-financed; that traffic will continue to recover from a recessionary dip and the authority will maintain sound financial operations without state interference,” the report states.
Today the state announced a project-labor agreement with unions for the new $5 billion Tappan Zee Bridge.