PETALUMA, CA — The Sonoma-Marin Area Rail Transit received an AA rating from Standard and Poor’s — S&P— Global Ratings on its proposed refinancing of its construction debt through the issuance of green bonds, SMART touted in a news release Monday.

In a review of SMART’s creditworthiness, S&P also affirmed its AA bond rating of the North Bay transit agency’s existing bonds, SMART officials said.

“This successful step will put SMART closer to its goal of reducing debt service by as much as $3 million annually,” said Eric Lucan, Chair of SMART Board of Directors and Novato city councilman.

“S&P Global Ratings assigned this new ‘AA’ long-term rating on SMART’s anticipated $123.4 million Measure Q sales tax revenue refunding bonds, which will be sold as green bonds due to their tie to the environmental benefits of SMART. An AA rating indicates that the issuer’s capacity to meet its financial commitment on the obligation is very strong,” SMART officials said.

The rating reflected S&P’s view of “The very strong economic fundamentals of SMART’s two-county district,” and SMART’s “historically low volatility of … sales tax revenue,” according to SMART Outreach Specialist Matt Stevens.

The rating cited the important cushion between the current and forecast maximum annual debt service SMART is required to pay over the life of the debt — a cushion that SMART intends to improve as part of its refinancing, Stevens said.

In March, S&P revised the outlook on all bonds issued by transit agencies secured by tax revenue pledges to “negative,” reflecting S&P’s view that the “recession and social distancing-driven declines in transit activity levels will likely place material pressure” on agencies like SMART.

“As a result of this action, SMART’s rating still carries this outlook of ‘negative’; however, SMART has not seen its rating downgraded as have other transit agencies,” Stevens said.

Stevens pointed out that receiving a ratings review is one of the many steps SMART has taken in the past few months toward refinancing debt amid historically low rates.

According to Barbara Pahre, who serves as SMART vice chair and as president of the Golden Gate Bridge & Highway Transportation District: “These savings will provide greater fiscal stability for SMART and allow the agency to stabilize its operating costs despite the historic impacts of the pandemic.”



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