(Bloomberg) -- The New York State Thruway, a 570-mile toll road connecting New York City to Buffalo, had its credit rating raised one-notch by Moody’s Ratings, which cited increasing certainty of its debt profile and a toll increase approved last September.
Moody’s raised its rating on $3.5 billion of senior revenue bonds to Aa3, its fourth-highest investment grade, and the grade on $2.5 billion junior debt was raised to A1. The Thruway’s outlook was revised to positive from stable. The upgrade comes as the toll road prepares to sell $520 million senior bonds in October to refinance higher cost debt.
Moody’s doesn’t expect the toll road will need to issue “significant” additional debt to settle a contract dispute with the builders of the Governor Mario M Cuomo Bridge, formerly known as the Tappan Zee Bridge. The Thruway has about $230 million set aside in its 2024 to 2028 capital plan to offset settlement costs, Moody’s said.
“Importantly, the current capital plan only necessitates standard maintenance works that do not pose significant complexity or cost overrun risk, which in turn decreases the possibility of unexpected additional debt,” Moody’s said in a news release.
Last September, the Thruway Authority approved a toll increase in 2024 and another in 2027. Steady revenue growth is needed to ensure that the Thruway maintains its road and bridges in good repair and meets financial metrics, Moody’s said.
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