The Port Authority of New York and New Jersey’s credit rating was cut one level by Moody’s Investors Service, which said the agency needs $2 billion in additional funds through 2016, primarily for the World Trade Center, and faces “significant growth” in capital needs.
Moody’s lowered the ratings for the agency that runs the New York City region’s three major airports, two Hudson River tunnels, four bridges and six marine-cargo terminals to Aa3, its fourth-highest rating, from Aa2. The action, which affected $18.2 billion in bonds, comes as the authority prepares to issue $2 billion in taxable debt this week.
“The increasingly back-loaded amortization of debt with this issue, while providing more debt capacity and stable financial metrics in the near and medium term, increases longer-term risks,” Moody’s said in a news release. The company gives the authority’s credit a stable outlook.
The agency may add $17 billion to it $26.9 billion 10-year capital plan as it seeks to maintain aging infrastructure, Moody’s said. Those projects may require toll and fare increases that aren’t sustainable, the rating company said.
Last year, the Port Authority raised the cost of crossing the Hudson River by car to $12 from $8. The agency, which said the increases were needed to fund the 10-year capital plan while maintaining its credit rating, plans to raise tolls by $1 in December of this year and in 2014 and 2015.
“The Port Authority’s fiscal health remains strong,” Lisa MacSpadden, a spokeswoman, said in an e-mail. “The agency is committed to continuing its extensive reform initiatives to cut costs, find additional sources of non-toll revenue, and move forward with its core mission of building and maintaining the region’s extensive transportation network.”
Standard & Poor’s and Fitch Ratings assign a AA- grade to the authority’s bonds, comparable with Moody’s assessment.