Infrastructure and Project Finance
Moody's Ratings
Specifically referring to federal resources, the total amount of the funding/percentage of total costs to be funded is defined at 100%. So far, the federal government has released $60 million emergency relief funds to finance initial costs such as mobilization, operations and debris recovery, following the declaration of State of Emergency by Governor Wes Moore on March 26, 2024 and MDOT and MDTA's request to US Department of Transportation's Federal Highway Administration (FHWA) for a quick release of emergency relief funds. Soon after the request, the FHWA approved and made available the requested amount as down payment toward initial costs. In a stress case scenario where 100% of federal funding is unavailable and the federal government covers only the usual 90% of the project costs, similar to emergency relief fund releases for interstate roads, MDTA would need to cover the remaining 10%. MDTA would have options to fund this 10% and/or bridge near-term reconstruction costs if needed. These include tapping its $650 million in liquidity (unrestricted and discretionary reserves) as of March 2025 as well as using funds from insurance. If MDTA needs to issue debt or deplete its liquidity to finance bridge replacement, it could place additional pressure on MDTA as it is in the midst of a $5.1 billion capital expenditures program (2025-2030). This program includes the $1.7 billion Key Bridge replacement project, expected to be fully funded with the $350 million from insurance proceeds and the remaining from federal emergency relief funds. For all the other projects, this program contemplates the issuance of about $2 billion in new debt and the remaining portion is expected to be funded with internally generated cash and liquidity balances. This is expected to result in the depletion of MDTA's current strong level to close to the triggers for downgrade. Of note, MDTA has an internal policy to keep the minimum liquidity of $400 million unrestricted cash balance and coverage above 2.0x. In any case, in line with its track record, we expect MDTA to take action to maintain its strong financial profile by increasing toll rates or making other adjustments.
Exhibit 2 Fiscal 2025-2030 Capital Expenditures Program USD million
Francis Scott Key Bridge replacement project Remaining projects of MDTA facilities
0 200 400 600 800 1,000
2025
2026
2027
2028
2029
2030
Source: Maryland Transportation Authority
Revenue Generating Base Key MDTA's assets are located in the Baltimore area and according to Moody’s Analytics, as of January 2025, Baltimore-Columbia- Towson will grow more slowly than the U.S. in the next year. Federal government job losses will constrain payroll and income growth, and logistics will underwhelm. In the long term, poor demographic trends will render Baltimore-Columbia-Towson an underperformer. The State of Maryland (Aa1, stable) will face greater economic risk than other states from federal government actions, in view of its elevated level of federal employment and several other key measures. After supporting the state economy for many years, the presence of federal agencies including the National Institutes of Health, the Food and Drug Administration, the Social Security Administration and many other agencies creates a vulnerability at a time of federal downsizing. Cuts in federal workforce could have a negative impact in traffic, however as an important offset to this negative impact there is the new administration memorandum calling for all federal employees to return to the office full-time. This is especially important given the relevance of remote work in the region, which has been one of the key reasons for an overall slower recovery to pre pandemic levels versus other regions.
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22 May 2025
Maryland Trans. Auth. - Trans. Facilities: Update to credit analysis
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