A major credit-rating agency downgraded the state Thruway Authority on Tuesday, citing uncertainty over how much tolls will increase to fund a replacement for the Tappan Zee Bridge.
Standard & Poor’s gave the Thruway an “A” long-term bond rating, knocking it down one notch from the “A+” it had. The move came more than a year after S&P issued a warning about the Tappan Zee financing, when it downgraded the authority’s credit outlook from stable to negative in June 2012.
“Although we have a general idea of how much tolls will be increased to fund the replacement of the Tappan Zee Bridge and ongoing capital needs for the rest of the system, the combination of the lack of a specific tolling plan and the potential for lower traffic levels at a time when the NYSTA will increase its leverage significantly led to the downgrade,” S&P credit analyst Joseph Pezzimenti said in a statement.
The credit downgrade comes as the state awaits word from the federal government on the status of its loan application for the Tappan Zee project.
The state has requested $1.58 billion from the feds in the form of a low-interest loan under the Transportation Infrastructure Finance and Innovation Act to help finance the bulk of the $3.9 billion project. Gov. Andrew Cuomo suggested last week that the state aimed high with its initial ask and will likely get a lesser amount.
In its downgrade Tuesday, S&P said the Thruway Authority is likely to rely on “frequent rate increases in the foreseeable future.” The rating agency said the long-term outlook for the authority is stable.
Updated: The Thruway Authority offered a positive take on the credit rating. It owns the 570-mile thoroughfare and the Tappan Zee Bridge.
“Throughout the past two years, the Thruway Authority has streamlined operations and cut more than $100 million in expenses. We are pleased that the ‘negative outlook’ was removed from our general revenue bonds and that we remain in Standard & Poor’s “A” credit category,” Thomas Madison, the Thruway Authority’s executive director, said in a statement. “We are confident that the Thruway Authority’s credit will remain stable or improve.”