The Port Authority of New York and New Jersey received a boost from the capital markets when Moody’s Investors Service changed its outlook to stable from negative.
Moody’s, in an announcement late Monday, cited its expectation that the Port Authority’s operating revenue will continue to recover over 24 months, enabling it to return to a total net revenue debt service coverage ratio of 1.75 times by 2023.
Moody’s also affirmed the bi-state agency’s senior lien Aa3 consolidated revenue bond ratings and the A1 bank bond rating assigned to the commercial paper Series C.
At the same time, Moody’s assigned Aa3 ratings to the Port Authority's $635.9 million of consolidated bonds, 228th series and $420 million of consolidated bonds, 229th series. In addition, Moody’s affirmed the Prime-1 (P-1) short-term rating on the outstanding commercial paper Series A, B and C.
The Port Authority, which is observing its centennial, has $27.8 billion of debt, according to its Sept. 30 financial statement.
Its holdings include the region’s main airports, John F. Kennedy International, Newark-Liberty and LaGuardia; the largest container port in the U.S.; several bistate bridges and tunnels; real-estate holdings and the Port Authority Trans Hudson, or PATH, commuter rail line.
According to climate experts, New York’s regional port system is well-positioned to counter climate change effects because of the water's deepness and the system's access to funding.
“The Port Authority has some great natural assets that we’re now rediscovering,” Mitchell Moss, director of New York University’s Rudin Center, said at a recent
Revenue generated by its tunnels, bridges and terminals segment as well as by the ports segment has recovered to levels largely consistent with or above 2019 levels, Moody’s said, while the aviation and PATH segments still lag the recovery from the COVID-19 pandemic.
“There is some risk to the Port Authority's draft 2022 budget in particular if new COVID-19 variants will temper the recent recovery in international travel over the next few months,” Moody’s said.
According to Moody’s, long-term pressure persists on the authority’s Aa3 rating given its $37 billion, 10-year capital plan for the period 2017-2026, significant maintenance needs, high fixed costs and persistent operating losses at the PATH system, “which is recovering only slowly from the pandemic.”
The authority on Nov. 18 released its proposed $7.9 billion 2022 budget, which consists of $3.4 billion for operating expenses, $2.7 billion for annual capital spending, and $1.8 billion for debt service and deferred expenses.
“We remain committed to advancing the vital projects and services that serve our customers and region,” authority Executive Director Rick Cotton said. “The agency continues its recovery from the extreme revenue loss due to the impact of the pandemic and the challenges COVID-19 has imposed remain significant.”
