Moody's Investors Service on Thursday affirmed its strong ratings on $56 million worth of the West Virginia Parkways Authority's toll revenue bonds.
The rating agency maintained its "Aa3" rating on the authority's outstanding revenue and variable rate refunding bonds, and said the ratings outlook for the future appears stable.
"The Aa3 rating reflects the essentiality of the toll road, the authority's strong debt service coverage ratios and low debt levels, and that no new additional debt is allowed under the current indenture," the Moody's analysis said.
Analysts said both the rating and the stable outlook are based on a series of factors, including current traffic levels and the authority's ability to finance its ongoing 10-year major capital improvement plan.
They said the fact that the 88-mile Turnpike is vital to both interstate and intrastate traffic with little competition is a key strength for the system.
They said only factors that could lower the bond rating in the future would be a significant drop in Turnpike traffic and decline in the authority's financial liquidity and cash on hand.
However, analysts do not believe either scenario is likely to happen. They also expect construction and maintenance costs to remain steady over the remaining life of the bonds, the last of which are due to be paid off in 2019.
"The stable outlook reflects our expectation that necessary operating cost increases and capital improvements to the road will be matched by available revenues, with maintenance of currently strong (debt service coverage ratios) and stable liquidity levels," the analysis said.
While Moody's doesn't foresee a downgrade in the rating, it doesn't foresee an upgrade in the authority's future either. Analysts maintained the area's toll system still faces some challenges.
That includes the fact that Turnpike toll revenues rely heavily on commercial traffic, which can be susceptible to economic downturns. They also said the Parkways Authority's "limited autonomy from political processes" could make future necessary toll increases difficult.
"Given the authority's small scale of total traffic and toll-raising restrictions, we do not expect to increase the authority's rating," the analysis said.
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