November 8, 2012 / 9:48 PM / 5 years ago

TEXT-Fitch: U.S. East Coast transportation assets weather Sandy

Nov 8 - 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

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