NEW YORK--(BUSINESS WIRE)--Fitch Ratings has assigned an 'AA-' rating to Maine Municipal Bond Bank's (the bond bank) $50 million transportation infrastructure revenue bonds (TransCap program) series 2008A. The bonds, the first to be issued under this program, are expected to sell through negotiation Sept. 23, 2008 and are due Sept. 1, 2009-2023.The 'AA-' rating reflects the security provided from satisfactory coverage by pledged revenues which are constitutionally dedicated to transportation and statutorily allocated to the TransCap fund, an adequate additional bonds test and the fifteen year amortization for program bonds. The rating also recognizes the relatively narrow pledge of motor fuel taxes, 45% of all pledged revenues, although indexing of the motor fuel taxes to the consumer price index somewhat mitigates this concern. The broader highway fund is not pledged. Pledged revenues represent about 10% of overall highway revenues. TransCap revenues to the bond bank are subject to biennial legislative allocation. The Rating Outlook is Stable.
With this program, the bond bank continues as the financing agency of the state for transportation revenue bond projects. The new TransCap program is part of the state's bonding program supporting bridge and highway projects. These bonds are separately secured from the bank's GARVEE bonds and from state general obligation highway bonds but all funds are available to support the capital program. Legislation enacted in 2008 provided for a total of $210 million of these bonds, $50 million for transportation programs and $160 million for bridges. The remaining program bonds are expected to be issued through 2013.
The bonds are paid from revenues in the new TransCap fund which was created for the program and is held by the bank. To provide monies for debt service, legislation was enacted in 2008 to allocate 7.5% of fuel excise tax revenues along with revenues generated by $10 increases in motor vehicle registration, title and license plate fees to the fund. In addition, the highway fund's responsibility for public safety expenses was reduced from 60% to 49%, with the general fund assuming the added expenses. The difference between the old and new highway fund obligation--11% of public safety expenses is allocated to the TransCap fund and part of the pledge, providing some 13% of fiscal 2009 revenues. Legal provisions provide for an additional bonds test (ABT), 200% of maximum annual debt services based on 12 consecutive months out of the previous 24, a longer than average look-back period. The debt service reserve fund, equal to 50% of maximum annual debt service, will be funded from bond proceeds.
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