Fitch Assigns Bay Area Toll Authority, CA's Sr. Toll Bridge Rev Bonds 'AA-'; Outlook Stable

CHICAGO--()--Fitch Ratings has assigned an 'AA-' rating on Bay Area Toll Authority, CA's (BATA) $513.6 million series 2014D, E, F-2, G, and H senior toll bridge revenue refunding bonds. Additionally, Fitch has affirmed the 'AA-' rating on the remainder of BATA's approximately $5.6 billion outstanding senior toll bridge revenue bonds. The Rating Outlook is Stable.

BATA will also be issuing $300 million of subordinate lien bonds to finish the Toll Bridge Seismic Retrofit Program adding to the $3.3 billion in outstanding subordinate toll bridge revenue bonds that are not rated by Fitch.

KEY RATING DRIVERS

The 'AA-' rating reflects BATA's continued significant progress associated with their seismic retrofit capital investment program, which is now largely complete. It also reflects stable traffic and revenue performance on the authority's asset base following a period of significant toll increases, with no more planned in the foreseeable future.

Critical Assets in Strong Service Area - Volume Risk: Stronger

The bridge system's long operating history and diverse, mature traffic base in the urbanized, wealthy and growing San Francisco Bay service area provides a critical transportation link and has demonstrated a resilient traffic base.

Monopolistic Position Supports Ratemaking Flexibility - Price Risk: Stronger

BATA's near-monopolistic position and the region's economic strength provide management the ability to adjust rates to maintain a stable financial profile.

Well-Managed Capital Program - Infrastructure Development & Renewal: Stronger

BATA is now approaching the completion of its seismic retrofit projects. Remaining projects within the program are limited in terms of scope although a number of issues need to be resolved following routine checks of various structures post-completion.

Variable Rate and Multi-Layered Swap Exposures - Debt Structure: Midrange

The authority maintains a comparatively complicated debt structure, featuring over $2.7 billion in variable rate debt partly hedged via traditional floating-fixed interest rate swaps, albeit that some of these swaps are negated by offsetting fixed-floating swap overlays.

Sound Financial Metrics, Albeit Relatively Leveraged

BATA's total net debt to cash flow available for debt service is 12.3x with increasing debt service obligations through 2036. Management has a policy to maintain $1 billion in cash and investments, providing significant liquidity to the authority.

RATING SENSITIVITIES

Traffic Volatility: Changes in BATA's traffic levels that result in a significantly improved or worsened financial performance could cause Fitch to reconsider the rating.

Changes in Leverage: An increase in total leverage without corresponding toll increase that has a detrimental effect on BATA's financial metrics could put pressure on the rating while material deleveraging of the project could result in positive rating action.

SECURITY

The senior bonds are secured by a statutory lien on bridge toll revenues.

TRANSACTION SUMMARY

BATA is refunding the remaining series 2009 F-1 bonds into $431.1 million of variable rate debt and $82.5 million of fixed rate debt. The refunding is expected to provide cash flow savings in excess of $50 million through 2019.

For more information, please see Fitch's press release ' Fitch Affirms Bay Area Toll Authority, CA's Senior Toll Bridge Rev Bonds at 'AA-'; Outlook Stable'; dated April 11, 2014 and available at 'www.fitchratings.com'.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Rating Criteria for Infrastructure and Project Finance' (July 12, 2012);

--'Rating Criteria for Toll Roads, Bridges, and Tunnels' (Aug. 20, 2014).

Applicable Criteria and Related Research:

Rating Criteria for Infrastructure and Project Finance

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=682867

Rating Criteria for Toll Roads, Bridges and Tunnels

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=758708

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=923075

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Contacts

Fitch Ratings
Primary Analyst
Daniel Adelman
Analyst
+1 312-368-2082
Fitch Ratings, Inc.
70 West Madison Street
Chicago, IL 60602
or
Secondary Analyst
Saavan Gatfield
Senior Director
+1 212-908-0542
or
Committee Chairperson
Chad Lewis
Senior Director
+1 212-908-0886
or
Media Relations
Elizabeth Fogerty, +1 212-908-0526
elizabeth.fogerty@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Daniel Adelman
Analyst
+1 312-368-2082
Fitch Ratings, Inc.
70 West Madison Street
Chicago, IL 60602
or
Secondary Analyst
Saavan Gatfield
Senior Director
+1 212-908-0542
or
Committee Chairperson
Chad Lewis
Senior Director
+1 212-908-0886
or
Media Relations
Elizabeth Fogerty, +1 212-908-0526
elizabeth.fogerty@fitchratings.com