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Metropolitan Transportation Authority, NY - Moody's Research Report

MOODY'S REVISES OUTLOOK ON METROPOLITAN TRANSPORTATION AUTHORITY (NY) TRANSPORTATION REVENUE BONDS TO NEGATIVE FROM STABLE AND AFFIRMS A2 RATING

Posted on: December 18, 2009, 11:54 am

NEW YORK, Dec 18, 2009 -- Moody's Investors Service has affirmed the A2 rating of the New York Metropolitan Transportation Authority's (MTA) Transportation Revenue Bonds and revised the outlook to negative from stable. The A2 rating incorporates the diversified revenue base that supports the bonds; satisfactory flexibility to manage a complex portfolio of variable rate debt and swaps; the track record of state and city support along with various bond programs that fund capital plans; and the essential service provided by the MTA to New York City and the seven surrounding New York metropolitan counties. This week, the MTA board approved, as required, a balanced budget for 2010 as well as a revised budget for 2009 to address an unexpected shortfall. With just weeks before the end of its fiscal year, December 31, 2009, the MTA learned that the New York State Legislature will withhold $143 million in 2009 funds that had already been appropriated to balance a portion of the state's own projected budget gap for fiscal 2010 (which ends March 31, 2010). In addition, the MTA was notified that revenues from a new payroll mobility tax were running below forecast even though recent estimates provided by the state appeared to be on track. The new revenue stream was approved by the state legislature last spring to provide recurring resources to enable the MTA to avoid severe service reductions and substantial fare hikes. Due to continued economic weakness, out year projections for the new tax as well as existing MTA-dedicated taxes were also revised downward. Finally, the MTA lost an appeal of a TWU arbitration award, thereby adding costs, beginning in 2010, above those already in the proposed budget for salary adjustments...

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