MTA upgraded by S&P, citing state support and congestion toll

S&P Global Ratings Tuesday upgraded the New York Metropolitan Transportation Authority's transportation revenue bonds to A from A-minus.

The rating agency cited the MTA's congestion pricing program, recovery in ridership, healthy liquidity levels, and continued state support as the basis for the new A rating.

"S&P's upgrade demonstrates continued growth in confidence in the MTA's financial stability while recognizing the early success of the congestion relief tolling program, ongoing ridership recovery and dedicated state support to maintain a strong financial position," MTA CFO Jai Patel said in a press release. "To further support the MTA's financial profile, we'll continue to focus on operating budget savings while delivering reliable service."

S&P revised its outlook to stable from positive at the new, higher rating.

It's the MTA's second upgrade of the summer; Moody's Ratings upgraded its rating to A2 from A3 in June. The MTA plans to issue transportation revenue bonds this fall, according to the release.

The transportation revenue bonds are rated AA by Fitch Ratings and KBRA.

A driving factor of the rating was New York state's support for the MTA's 2025-2029 capital program. State lawmakers increased the payroll mobility tax to provide an estimated $1.4 billion of annual revenue, according to the MTA. That sum can support $31 billion of bonds.

S&P's rating report said the state's repeated support and the "clarity regarding funding sources" was a positive for the MTA's rating.

The agency's congestion pricing program, which began collecting tolls in January, was another factor in the upgrade, according to the rating report. The MTA hopes the tolls will generate $500 million annually for its 2020-2024 capital program; so far, congestion pricing net revenues are 8% favorable to budget, according to the MTA's press release.

When President Donald Trump took office, he attempted to rescind federal approval for congestion pricing, among other threats to the state and the MTA. The agency is fighting the administration in court, and leadership has expressed optimism that the program will remain intact.

"Loss of congestion pricing revenues, absent timely management actions, could cause downward rating pressure," S&P's analysts warned.

The MTA's farebox revenue has increased, in part due to congestion pricing and the agency's anti-fare evasion efforts. This was a driving factor in the upgrade, according to the report. However, ridership has not returned to the agency's 2019 levels.

"We believe ridership will remain slow to return to pre-pandemic levels due to modifications to working conditions that result in a gradual return to the office and flexibility to work remotely," the report said.

The MTA has $17 billion of transportation revenue bonds outstanding.

The MTA uses several other credits to issue bonds, including the payroll mobility tax, sales tax, a "mansion tax" on high-end real estate transfers, and the Triborough Bridge and Tunnel Authority; soon, it intends to add congestion pricing revenue to the list. S&P's ratings for those bonds all exceed the transportation revenue bonds' A rating.