KBRA Assigns AA Rating, Stable Outlook to Triborough Bridge and Tunnel Authority Real Estate Transfer Tax Revenue Bonds
KBRA assigns a long-term rating of AA to the Triborough Bridge and Tunnel Authority (MTA Bridges and Tunnels) Real Estate Transfer Tax Revenue Bonds, Series 2026A (TBTA Capital Lockbox Fund). Concurrently, KBRA affirms the AA rating on outstanding parity bonds. The Outlook is Stable.
The rating reflects the non-appropriation pledge and statutory dedication of New York City Real Estate Transfer Tax (“RETT”) Receipts, which are transferred in monthly installments by the State Comptroller to the 2020 to 2024 Capital Program Account of the MTA Capital Lockbox Fund (the “Lockbox”) held by the Triborough Bridge and Tunnel Authority (“TBTA”, or “MTA Bridges and Tunnels”). Upon deposit to the Lockbox, RETT Receipts become subject to the lien of the TBTA RETT Bond Resolution and are statutorily segregated from the general operating budgets and other monies of the MTA and TBTA.
The sound legal and security provisions of the credit structure include a closed senior lien, a $150 million cap on maximum annual debt service (“MADS”) imposed by the TBTA RETT Resolution, a DSRF equal to aggregate MADS, to be immediately replenished if drawn upon, and a conservative flow of funds that allows for the capture of RETT Receipts well in advance of the debt service due date and prior to any transfers out. The statutory inability of TBTA to file for bankruptcy protection while RETT Revenue Bonds are outstanding, and the inability of creditors to file involuntary proceedings against TBTA, further support the rating. Additionally, RETT Receipts are statutorily dedicated and do not sunset. These positive features are somewhat offset by the lack of structural downside protection against RETT Receipts falling below $150 million - other than that provided by the MADS funded DSRF. New York City residential real estate sales values and unit transactions, as estimated, are sensitive to real estate market cyclicality, as well as to severe economic dislocations akin to the global financial crisis (“GFC”) and more recently the pandemic, making RETT Receipts potentially volatile. Additionally, the collection history for RETT Receipts is limited, with the 2020 bond year representing the first year of collections.
