KBRA Assigns AA Rating, Stable Outlook to MTA Transportation Revenue Refunding Green Bonds, Series 2025B (Climate Bond Certified)

NEW YORK--(BUSINESS WIRE)--KBRA assigns a long-term rating of AA to the Metropolitan Transportation Authority, NY ("MTA" or "the Authority") Transportation Revenue Refunding Green Bonds, Series 2025B (Climate Bond Certified). The Outlook is Stable. Proceeds will refund certain outstanding MTA Transportation Revenue Bonds ("TRBs") and Dedicated Tax Fund Bonds and certain outstanding TBTA Payroll Mobility Tax Bonds.

The rating reflects MTA's ongoing paid ridership recovery, improved post-pandemic revenue and expenditure performance, and the achievement of key strategic and budgetary goals, including averting a 2025 fiscal cliff; maintaining the debt load at less than 15% of the operating budget; implementing Congestion Pricing; and fully funding the massive 2025-2029 Capital Program. Factors constraining the rating include Capital Program implementation risks, the need to address aging, climate-vulnerable infrastructure through ongoing state-of-good-repair projects, risks to the various special tax-supported operating subsidies upon which the MTA is reliant, and the impediment to sustained structural balance presented by exceptionally high fixed costs.

Transportation Revenue Bonds (“TRBs”), including the Series 2025B Bonds, are secured by a gross lien on pledged revenues consisting of fares and other operating revenues from the New York City Transit, MTA Commuter and MTA Bus system, surplus TBTA operating revenue, various state and local subsidies, and dedicated taxes. As of August 12, 2025, $17.1 billion of TRBs were outstanding, representing 35% of MTA and TBTA’s $48.9 billion total obligations.

The monthly deposit of pledged revenues prior to operating expenses provides strong security. Statutory provisions require a balanced operating budget, authorize rate-setting sufficient to cover costs and debt service, and include a non-impairment and bankruptcy prohibition, all of which are viewed positively by KBRA. While the TRB Resolution does not require a debt service reserve fund, MTA maintains a General Reserve equal to 1% of operating expenses. Liquidity as of July 31, 2025 totaled $8.85 billion, including $1.17 billion in operating funds, $6.38 billion in internal reserves, and $1.3 billion in bank lines, providing a strong 134 days cash on hand.

Pledged Revenues are forecast at $16.7 billion in 2025, 19% above 2019 levels, driven by growth in dedicated taxes and subsidies. Coverage of 17.7x in 2025 is the strongest in five years.

System ridership is improving, with first half of 2025 subway and bus ridership up 8% and 12% year-over-year, supported by safety initiatives and fare compliance gains. Farebox revenue is forecast to grow 5.5% in 2025, to $5.2 billion. The $19.9 billion 2025 Adopted Budget is supported by fares and tolls (39%), dedicated taxes (43%), and other revenues (17%). Expenditures include payroll (37%), fringe benefits (23%), non-labor (24%), and debt service (13%). Through the first half of 2025, revenues exceeded budget by 2% and expenses were 1% below plan. The July 2025 Financial Plan projects a balanced $21.3 billion budget in 2026 and modest out-year gaps, mitigated by $500 million in recurring efficiency savings and biennial 4% fare and toll increases (January 2026, March 2027, and March 2029), expected to generate $2.5 billion over the Plan period.

The $68.4 billion 2025-2029 Capital Program, approved in June 2025, will be funded with federal, state, city, and MTA sources. A Payroll Mobility Tax increase included in the State FY 2026 Budget is expected to generate $1.4 billion annually. Planned MTA/TBTA issuance of $23.3 billion over the 2025-2029 Capital Program period includes $8.2 billion supported by the operating budget and $15.1 billion by capital lockbox revenues. CBDTP (Congestion Pricing) revenues are forecast at $500 million annually through 2027, rising to $700 million in 2028 and 2029.

Risks to the Financial Plan include potential ridership stagnation, paratransit funding shortfalls, unachieved efficiencies, labor cost pressures from expiring collective bargaining agreements, and economic volatility affecting tax revenues. Nonetheless, the Stable Outlook reflects KBRA's expectations of sustained strong pledged revenue coverage and continued support from state, city, and federal partners to fund core capital needs and continued ridership recovery.

Key Credit Considerations

The rating was assigned because of the following key credit considerations:

Credit Positives

• The gross revenue pledge supports robust debt service coverage. Sound liquidity and reserves provide adequate operating flexibility.
• MTA’s transportation assets serve over 15 million people and are essential to the economic well-being of the New York metropolitan area.

Credit Challenges

• Aging infrastructure, climate change resilience, and evolving ridership patterns are long-term challenges requiring extensive capital investment.
• An exceptionally high fixed cost burden, including contractually required labor-related obligations and debt service, remains an impediment to ongoing, structurally balanced operations.

Rating Sensitivities

For Upgrade

• Delivery of critical Capital Program elements, including state-of-good-repair projects, with maintenance of strong debt service coverage from pledged Transportation Revenues.

For Downgrade

• The reappearance of significant unfunded deficits during the Plan Period.
• A sustained decline in paid ridership.

To access ratings and relevant documents, click here.

Methodologies

• Public Finance: U.S. Public Toll Roads, Bridges & Tunnels Revenue Bond Rating Methodology
• ESG Global Rating Methodology

Disclosures

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA), one of the major credit rating agencies (CRA), is a full-service CRA registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a Designated Rating Organization (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan’s Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.

Doc ID: 1011173