Maryland Transportation Authority; Toll Roads Bridges
Environmental, social, and governance We analyzed MDTA's environmental, social, and governance (ESG) factors relative to the authority's market position, management, and governance, and determined all are in line with our view of the toll road sector standard. Management has taken various actions to create a more resilient and sustainable system by limiting exposure to cyber attacks and extreme weather events, and by performing periodic resilience studies.
Outlook
The negative outlook reflects our opinion that there is at least a one-in-three chance that the rating could be lowered over the outlook period.
Downside scenario We could lower the rating if actual financial performance trends negatively and is materially weaker than current forecast due to construction cost escalations, project delays, or softening demand. Upside scenario We could revise the outlook to stable if we believe MDTA can adjust capital spending, toll rates, and operating expenses as needed to maintain financial metrics in line with similarly rated peers as it finances the reconstruction of the Francis Scott Key Bridge and funds its large CIP. Clarity regarding the financing of the bridge construction in anticipation of receiving federal reimbursements and other identified debt-funded projects in its capital improvement program will be key considerations.
Credit Opinion
Enterprise Risk Profile: Very Strong
Diverse toll system with seven tolled assets along a critical traffic corridor MDTA's enterprise risk profile reflects our view of the mature system, consisting of seven pledged tolled facilities (generating about $761 million in toll revenues from approximately 165 million transactions for the fiscal year ended June 30, 2024) that we believe provide essential service for central Maryland's highway, bridge, and tunnel network, including I-95. (See table 2 for more information). The assessment also reflects the toll system's strategic location along the I-95 corridor, connecting the Northeast Corridor and cities like New York and Philadelphia with the nation's capital through Baltimore, as well as a lack of significant competition from toll-free roads and a relatively inelastic demand profile. Rate-setting flexibility provides management with options to bolster finances The system serves a diverse customer base of regional commuter, longer-distance intrastate and interstate commercial, business, and recreational travel. Traffic volumes have performed well historically. The authority has complete autonomy to set rates and has a history of regular although infrequent rate increases, and we note its current plans to increase toll rates in 2028 to support revenues and the additional debt we expect it to take on in conjunction with its CIP. MDTA's historical growth in toll revenue reflects a diverse revenue mix, with passenger cars and
APRIL 25, 2025 4
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