Rating Upgraded to A With an Improved Outlook to Stable Based on Significant Increase in Dedicated State Tax Revenues
Fitch’s Improved Rating Follows a Rating Upgrade by S&P and Improved Rating Outlooks by S&P and Moody’s
First Time in Over 20 Years the Authority Has Projected a Balanced Budget for Five Consecutive Years
The Metropolitan Transportation Authority (MTA) today announced an upgraded rating from Fitch Ratings, which improved the MTA’s Transportation Revenue Bonds rating from “A-” to “A” and the rating outlook from “negative” to “stable”. Fitch made the update based on a significant increase in State tax support garnered by Governor Hochul in the latest State Budget providing secured recurring revenue sources for the MTA’s operating budget. The additional tax revenues in combination with stronger ridership trends and toll and fare increases led the MTA to forecast five years of consecutive balanced budgets for the first time in its recent history. This announcement follows news that Moody’s Investors Service improved the credit outlook and S&P’s Global Ratings upgraded the rating and outlook for the MTA Transportation Revenue Bonds.
“The MTA would not be in this secure financial state without Governor Hochul’s steadfast commitment to funding public transit in this year’s State budget,” said MTA Chair and CEO Janno Lieber. “Wall Street is taking notice with continued growth in confidence in the MTA’s sustainable financial position.”
“We continue to execute on our historic five-year financial plan which demonstrates five consecutive years of balanced budgets," said MTA Chief Financial Officer Kevin. "Fitch’s improved rating and outlook is another sign of confidence in the MTA’s ability to deliver.”
In July, the MTA released its five-year financial plan that projects a balanced budget through 2027, the first time in more than 20 years the Authority has projected a balanced budget for five consecutive years.
An increase to the Payroll Mobility Tax, increase of City funding for paratransit, and other dedicated taxes in the FY 2024 New York State Budget, have strengthened the MTA’s financial profile, along with a modest fare and toll increase. At the same time, the MTA’s post-COVID ridership recovery continues to track along the mid-point of a range predicted by McKinsey in July 2022.
The credit rating outlook of MTA’s Transportation Revenue Bonds, backed by a diverse basket of revenues including fares and tolls paid by MTA customers and State revenue streams, reflects the performance of the operating budget and is a barometer of the MTA’s overall financial health.
Prior to the pandemic Fitch rated the MTA’s Transportation Revenue Bonds at an AA- with a stable outlook. During the pandemic, Fitch took several downward actions on the rating, until it reached a rating of A- with negative outlook in October 2020, where it remained until today’s action.