KBRA Assigns Ratings to Pennsylvania Turnpike Commission Oil Franchise Tax Senior Revenue Bonds, Series A of 2026 (AA-) and Subordinated Revenue Bonds, Series B of 2026 (A+); Affirms Ratings for Parity Bonds

NEW YORK--(BUSINESS WIRE)--KBRA assigns a long-term rating of AA- to the Pennsylvania Turnpike Commission Oil Franchise Tax Senior Revenue Bonds, Series A of 2026 and a long-term rating of A+ to the Commission's Oil Franchise Tax Subordinated Revenue Bonds, Series B of 2026. KBRA additionally affirms the long-term rating of AA- for the Commission's outstanding Oil Franchise Tax Senior Revenue Bonds and A+ for the Commission's outstanding Oil Franchise Tax Subordinated Revenue Bonds. The rating Outlook is Stable.

Key Credit Considerations

The rating actions reflect the following key credit considerations:

Credit Positives

• Established track record for effective collection, timely distribution, and periodic adjustment of the Commission Allocation.
• Statutory price floor of $2.99 per gallon used in calculation of the OFT tax rate insulates collections from motor fuel price volatility.
• Legal and statutory framework provides strong level of bondholder protection at the senior obligation level.

Credit Challenges

• Formula driven Commission Allocation is subject to fuel consumption volatility and to periodic adjustments of the effective fuel tax rate by the legislature.
• Absent periodic legislative action to adjust pledged revenues, the downward trend in motor fuel consumption experienced over the last decade is likely to continue, pressuring pledged receipts and debt service coverage over time.

Rating Sensitivities

For Upgrade

• Sustained increase in motor fuel consumption leading to increased Commission Allocation revenues.
• Supplementation or adjustment to pledged revenues resulting in substantially increased debt service coverage and consistent growth.

For Downgrade

• Decline in MADS coverage to a level no longer consistent with the rating level.

To access ratings and relevant documents, click here.

Methodology

• Public Finance: U.S. Special Tax Revenue Bond 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: 1016764