Top DelDOT credit ratings reaffirmed in review
DOVER – The Delaware Department of Transportation announced Wednesday that two of the four major credit rating agencies have reaffirmed its top-tier ratings.
In recent weeks, Moody’s Investors Service assigned an Aa1 rating to the department’s $219 million Series 2020 senior revenue bonds, while Standard & Poor’s assigned its AA+ long-term rating for the 2020 revenue bonds series.
Both ratings are one step off the top AAA rating, but a welcome sign as the department was last evaluated in August 2019 before the COVID-19 pandemic struck. Last year, Moody’s improved its rating of DelDOT and that evaluation held steady in the recent review.
DelDOT’s ratings also come just two months after the state government had its AAA rating reaffirmed by three of the ratings agencies, even as it too weathered the pandemic.
In a statement announcing the reaffirmed ratings, Gov. John Carney said, “We remain focused on protecting Delaware’s fiscal position and responsibly managing Delaware taxpayer dollars across state government. Rightly, that’s what Delaware taxpayers expect. Sound management of taxpayer dollars also allows us to access cheaper financing, save money, and build on the largest public infrastructure program in Delaware’s history.”
The Series 2020 bonds and outstanding transportation system senior revenue bonds are secured by a claim on the state’s Transportation Trust Fund revenue, which is made up of fuel taxes, tolls, motor vehicle fees, and more. Because DelDOT funds its capital improvement projects from the trust fund, it requires a separate credit rating than the state’s General Obligation bonds.
“These rating services’ reports are important metrics for investors and having these top ratings ultimately means we pay less interest on money we borrow to fund projects throughout Delaware,” Outgoing State Transportation Secretary Jennifer Cohan noted in a statement.
DelDOT’s current Capital Transportation Program will invest more than $4 billion in infrastructure maintenance and projects over the next six years. Retaining a high credit rating is imperative for states looking to invest in future project at favorable interest rates.
Although analysts at both Moody’s and S&P noted the historic uncertainty surrounding the COVID-19 pandemic, neither cited it as a current concern on the 20-year bonds.
“The stable outlook reflects our expectation that debt service coverage will remain strong, even given challenges brought on by the pandemic, including periods of reduced roadway use and the ensuing recession,” said S&P Global Ratings credit analyst Jillian Legnos in her review. “In our view, the established additional bonds test limits and the authority’s conservative debt management with an emphasis on pay-as-you-go funding – which we expect to continue – lend additional credit stability.”
By Jacob Owens