In this report, we present novel data regarding the functionality and predictive performance of GARD, generated in a blind study performed in association with the CE STTF
. In this independent dataset, GARD accurately classified 83% out of a total of 72 chemicals for skin sensitization hazard.
Strong Resilience of STTF Resources: Funds available for service contract payments totaled approximately $4.8 billion in fiscal 2017 compared to approximately $46 million in debt service on the series 2018 bonds and other parity debt expected to be issued by the corporation to complete the I-95/I-595 project plus the pro forma maximum legally permissible prior lien obligations of the STTF of roughly $534 million.
STTF Revenue Performance and Leverage: The rating is sensitive to expectations for long-term performance of the STTF revenues available to make service contract payments and/or the level of leverage of both prior and parity obligations payable from the same.
STTF Provides Substantial Resource Base for Service Contract Payments
STTF revenues are comprised of a mix of roughly 60% state and 40% federal resources.
The STTF revenues available to make service contract payments are net of various statutory set-asides and the maximum allowable debt service on prior debt obligations of the DOT secured by specific liens on STTF revenues.
Fitch believes future STTF revenue growth will remain prone to periods of high volatility, as has been the case historically, and potential weakening due to changes in federal transportation policy, shifts in demand for motor and aviation fuel, and disruptions in the real estate market, each of which are factored in our long-term slow growth revenue performance expectation.
STTF revenues available to make service contract payments provide robust coverage of maximum annual debt service (MADS) following this issuance (an estimated $15.7 million).
To evaluate the sensitivity of the net STTF revenue stream to cyclical decline, Fitch considers the results of its Fitch Analytical Sensitivity Tool (FAST), using a 1% decline in national GDP scenario, as well as assessing the largest decline in revenues over the period covered by the revenue sensitivity analysis.
Assuming full leveraging to the 5.0x additional bonds test (ABT), revenues could withstand a decline equal to almost 12x the FAST result or 4x the worst consecutive decline in net STTF revenues during the period measured by Fitch, an approximately 20% reduction from fiscal 2008-2010.
Under the service contract, the DOT may not make any payments from the STTF that would render it unable to make service contract payments related to the 2018 bonds in a timely manner.