LOS ANGELES — The Alaska Railroad Corp. received a one-notch downgrade from Standard & Poor's while Moody's Investors Service affirmed its A3 rating ahead of plans to price $96.6 million on July 21.
S&P lowered its underlying rating to A from A-plus on the Alaska Railroad Corp.'s parity capital grant receipts bonds on June 9.
The A long-term rating applies to the railroad's $96.6 million series 2015 refunding and revenue capital grant receipts; the outlook is stable.
"The lowered rating is a result of the overall higher debt level with the new issuance and the lack of a debt service reserve fund on the series 2015 bonds," said Standard & Poor's credit analyst Mary Ellen Wriedt.
The railroad extends from Seward north via Anchorage to Fairbanks along a 477-mile route. It serves the ocean ports of Seward, Whittier and Anchorage, and all four major military installations in Alaska.
Moody's assigns a stable outlook.
The bonds are secured solely by federal grant receipts from the Federal Transit Administration's Section 5307 and 5337 program funds. The $62.5 million series 2015A bonds will refund certain outstanding bonds, and the $34.2 million series 2015B bonds will fund a portion of the costs for the positive train control system that will improve safety. The series 2015 bonds will have a final maturity in 2023.
"The A3 rating incorporates the elevated degree of reauthorization risk common to all federal grant anticipation bonds," Moody's analysts said June 9. "The stable outlook reflects our expectation that Congress will provide stop-gap funding this summer to prevent a shortfall on the Highway Trust Fund and maintain spending at or near current levels for the time being."
The previous issues have a debt service reserve fund surety at 50% of maximum annual debt service.
