Various U.S. Mass Transit Enterprise Bonds Placed on Watch Developing After Release of Revised Criteria

Stocks and Financial Services Press Releases Thursday December 19, 2013 11:06
SAN FRANCISCO--19 Dec--Standard & Poor's

SAN FRANCISCO (Standard & Poor's) Dec. 18, 2013--Standard & Poor's Ratings Services placed the bond ratings on nine U.S. mass transit enterprises as well as the issuer credit rating (ICR) on one mass transit enterprise on CreditWatch with developing implications, following the release of our revised criteria for rating mass transit enterprises. (See "Mass Transit Enterprise Ratings: Methodology And Assumptions" and "RFC Process Summary: Mass Transit Enterprise Ratings: Methodology And Assumptions," to be published today on RatingsDirect.) The affected bonds are those secured by gross revenue, net revenue, or farebox revenue, and do not include bonds secured solely by sales tax revenue or grant revenue.

With regard to long-term ratings on bonds insured by National Public Finance Guarantee Corp. (A/Stable), those ratings were placed on CreditWatch with positive implications because the long-term rating on the insurer provides a credit floor such that the rating could either be raised or affirmed, and not lowered.

"We intend for the criteria to help market participants better understand our approach to assigning mass transit system ratings, to enhance the forward-looking nature of these ratings, and to enable better comparisons between these ratings and all other ratings," said Standard & Poor's credit analyst Paul Dyson. During the criteria development process, we performed extensive testing and analyses to assess the impact of the revised criteria on the nine U.S. and four European transit ratings in the sector. The results of the testing indicated that most ratings will not change, and those that do will do so by no more than one notch. However, given the timing of the testing versus the final criteria release, additional audited financial statements are now available, as are updated financial and operational projections. In addition, we believe that a refreshing of the information related to management, governance, and financial policies is necessary. Once we analyze the updated data, the ratings will either be raised, remain unchanged, or be lowered following the application of the revised criteria in combination with the receipt of updated financial, operating, and management information. We will resolve the CreditWatch listing within 90 days and will publish a full report for each rating.

We excluded the ICRs on the various European transit enterprises from the CreditWatch action because we anticipate that those ICRs will remain unchanged after the new criteria application. All rated mass transit systems in Europe are government-related entities (GREs), benefiting from "almost certain" or "extremely high" likelihood of support per our GRE criteria (see "Rating Government-Related Entities: Methodology and Assumptions," published Dec. 9, 2010).

The mass transit enterprises in the U.S. for whom bond ratings (and an ICR, where applicable) are affected by this action are:
San Diego Metropolitan Transit System, Calif.

San Francisco Municipal Transportation Agency, Calif. Metropolitan Transportation Authority of New York Peninsula Corridor Joint Powers Board, Calif. Sacramento Regional Transit District, Calif. (bonds and ICR) Washington Metropolitan Area Transit Authority, D.C. Corpus Christi Regional Transportation Authority, Texas Chicago Transit Authority, Ill. VIA Metro Transit Authority, Texas.

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