Rebounding from a dramatic drop in revenue during the pandemic, the North Texas Tollway Authority has regained a stable outlook on its A-plus rating from S&P Global Ratings ahead of an $852 million bond refunding.
"The outlook revision reflects our view of the improvement in NTTA's monthly toll transactions to near 100% of its 2019 levels following a material drop in traffic during 2020," said S&P analyst Kevin Archer. “The recovery in traffic will allow the system to achieve future financial metrics consistent with historical results.”
The upcoming deal includes $403 million of first-tier refunding bonds rated A-plus and $449 million of second-tier bonds rated A.
The first-tier bonds will refund bonds issued in 2008 and 2014 for interest savings.
The second-tier bond proceeds will refund the Texas Department of Transportation loan for the 360 Tollway and transfer that asset to the NTTA system. The issue will also take out $200 million of commercial paper.
The 360 Tollway is a 9.7-mile toll road between Tarrant and Ellis counties. Built as a public/public partnership between TxDoT and NTTA, it opened to traffic on May 11, 2018.
"The long-term ratings reflect our view that management will continue to implement or maintain such measures as either reducing expenses or deferring capital spending, or use other means to maintain financial metrics that we believe will still be consistent with the current rating and near 2019 historical levels," Archer said.
Moody’s Investors Service has a stable outlook on its A1 rating for first-tier bonds and A2 on second-tier debt.
The NTTA system's primary arteries, the Dallas North Tollway, President George Bush Tollway, and Sam Rayburn Tollway, serve the fastest growing areas of the Dallas-Fort Worth area, representing 75% of total revenue throughout the traffic consultant's forecast.
Since restructuring its debt in 2014, NTTA has reported more than $1 billion in interest savings through refunding in a low-interest-rate environment.
Even after a 25% drop in revenues during the COVID-19 pandemic last year, NTTA maintained debt-service coverage ratios above the levels required by bond covenants. The authority reduced spending and delayed some projects.
