New York MTA Raised to AA- as Agency Plans $500 Million Issue

The Metropolitan Transportation Authority’s revenue bonds were boosted by Standard & Poor’s to the fourth-highest investment grade as the New York agency plans to sell $500 million of them this week.

The sale of the AA- rated securities may happen as soon as tomorrow, according to data compiled by Bloomberg. Proceeds will finance transit and commuter projects, according to bond documents. The MTA had about $20 billion of such bonds as of May 2, according to its website.

The authority, the largest U.S. mass transit system, employs 66,000 workers and carries 8.5 million riders daily on subways, buses and commuter railroads in the New York City area.

The agency’s performance on a measure of financial risk was strong, Joseph Pezzimenti, an S&P analyst, wrote in a report released today.

The rating move comes as the authority’s debt has gained this year. MTA transportation-revenue bonds maturing November 2036 traded today with an average yield of 3.6 percent, about 1.6 percentage points above benchmark municipals, data compiled by Bloomberg show. That yield gap is down from 2.4 percentage points at the start of the year.

Moody’s Investors Service rates MTA’s revenue bonds two levels lower, at A2, which is comparable to Fitch Rating’s A grade for the credit.

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