Fitch Downgrades MTA Revenue Bonds

Gotham Gazette | September 8, 2011

By David King

Fitch Ratings has downgraded $14.3 billion on outstanding Metropolitan Transportation Authority transportation revenue bonds from an 'A' to an 'A-plus.' The agency also downgraded the long-term rating of Triborough Bridge and Tunnel Authority general subordinate bonds.

Fitch said the move came because of escalating operating costs and foretasted deficits.

"Just like in Washington, decisions made by our elected officials in
Albany caused this downgrade," said Paul Steely White, Executive
Director of Transportation Alternatives.

"The State's raids on public transit funding have forced the MTA to pay for subways and buses with debt. Now, it will cost more for the MTA to run the system, and this will hit New Yorkers where it hurts--fare hikes and service cuts; unless our elected officials in Albany find secure revenue for public
transit."

The downgrades come as the agency waits for Gov. Andrew Cuomo to pick a new director to replace outgoing chairman Jay Walder. Transportation advocates are concerned about Cuomo's interest in the city's mass transit system and have been pushing Cuomo to pick someone with experience with a large transit system.

The MTA released a statement last night saying: "Since Fitch put these credits on negative outlook in late 2009, the MTA has successfully weathered continued difficulties in the local economy, and has taken actions to ensure that it continues to meet its financial obligations and mission.
While a downgrade is never welcome news, we believe the strength of the credits remains fundamentally secure. We also believe that the impact of the Fitch rating action is largely priced into the market already and that any pricing impact would be minimal."