Fitch: East Coast Transportation Assets Weather Sandy

Fitch Ratings has released a special report highlighting the capacity of East Coast transportation assets to meet operational challenges from Hurricane Sandy and to meet financial obligations in the coming months. The report focuses on the immediate recovery efforts and how these costs may be defrayed through insurance and federal emergency relief grants provided by the Federal emergency Management Agency (FEMA).

'Issuers face longer-term challenges as they contemplate the impact of the increasing occurrence of severe weather. These costs could be substantial and will most likely be self-funded through unplanned debt issuance as grant funding could be hard to come by,' said Mike McDermott, Managing Director in Fitch's Global Infrastructure Group. 'Debt financing such upgrades provides a 20-year to 30-year window during which tolls and fares can be gradually increased, providing some cushion to the politically unpopular need to raise user fees especially after recent toll and fare increases that were substantial. Transit systems will depend more on subsidies and grants.'

Fitch identified 23 issuers within Sandy's path. The majority have 140 days cash on hand (DCOH) or more, meaning that they can, and often do, manage through extreme weather events, counterparty bankruptcies, and short-term revenue losses from closure or the temporary lifting of tolls. While port and transit assets were hit hardest, liquidity and insurance should be sufficient.

Going forward, management will need to weigh current capital plans and the desire to maintain current credit ratings/debt costs against the need to harden assets and reduce future recovery costs. The availability of federal and state subsidies, if any, could be an important mitigating factor.

The report also includes a table highlighting the operational status of 23 affected issuers, coupled with liquidity as of the most recent fiscal year end (FYE), the amount of cash in the debt service reserve fund and upcoming debt payment dates.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research: East Coast Transport Assets Weather Sandy

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=694777

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Contacts:

Fitch Ratings
Mike McDermott, [phone]
Managing Director
One State Street Plaza
New York, NY 10004
or
Cherian George, [phone]
Managing Director
or
Thomas McCormick, [phone]
Managing Director
or
Media Relations:
Elizabeth Fogerty, New York, [phone]
[e-mail]