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Moody’s Investors Service Credit Rating Agency Upgrades Foothill Eastern Transportation Corridor Agency Toll Revenue Bonds to Baa1

Sustained revenue growth, improved debt service coverage, and fiscally responsible management and governance of the 133, 241 and 261 Toll Roads credited for upgrade in rating.

Irvine, Calif. - October 25, 2023

The Foothill Eastern Transportation Corridor Agency (F/ETCA) continues to strengthen its economic position in the bond market with Moody’s Investors Service upgrading the Agency’s bonds from Baa2 to Baa1. F/ETCA operates the 133, 241 and 261 Toll Roads in Orange County, Calif.

Following are the F/ETCA’s current bond ratings:

  • Moody’s: Baa1 with outlook stable
  • S&P: A and A- respectively, with outlook stable
  • Fitch: BBB+ and BBB respectively, with outlook positive

“The upgrade to Baa1 reflects a trend of sustained revenue growth that is resulting in improving debt service coverage and available cash flow, which has strengthened financial flexibility. The revenue growth has been supported by consistent rate increases over the last 10 years, which have significantly bolstered revenues relative to the growth in underlying transactions,” stated in a recent release by Moody’s Credit Rating. Moody’s also stated “The improved cash flow positions FETCA to manage debt service more comfortably and capital needs and provides excess funds to deleverage. FETCA redeemed $220 million of debt in FY2023 and has identified $680 million of potential debt reduction through FY2030, offering the prospect for meaningful deleveraging relative to its $2.8 billion of total debt outstanding in FY2022.”

“Moody’s Ratings decision to upgrade the bonds reflects the Agencies’ financial strength and prudent fiscal planning that provide the stability needed to weather economic downturns and unforeseen events, while also advancing important improvements to our roads,” said F/ETCA Chair and San Juan Capistrano City Council Member John Taylor. “We see usage increases reach pre-pandemic levels as more and more people choose to drive The Toll Roads because of the predictable time savings and free-flow traffic conditions.”

“Strong fiscal management is core to the Agencies’ past and future success,” said TCA CFO Amy Potter. “These rating decisions help create opportunities for the Agencies to further reduce debt and strengthen our economic position in the bond market. Staff continues its commitment to working with our two Boards of Directors to focus on debt management strategies while fulfilling the Agencies’ mission of providing congestion relief for the region.”

All bonds issued by the Transportation Corridor Agencies (TCA) are rated investment grade. The bonds were issued to fund construction of the 73, 133, 241 and 261 Toll Roads and are repaid using toll revenue. The Agencies have taken significant steps to manage debt by leveraging lower interest rates through bond refunding without extending maturity dates and considering plans for early paydown of the bonds prior to maturity as they become callable. In early 2023, TCA used available cash reserves to pay down $150.8 million of bonds principal through open market bond buybacks that saved the Agencies $150 million in interest, as well as an early paydown of $125 million of bond principal in July 2022, saving $180 million in interest that would have matured in 2053.

The F/ETCA and San Joaquin Hills Transportation Corridor Agency (SJHTCA), which comprise TCA, are two joint powers authorities created to plan, finance, construct and operate Orange County’s 51-mile toll road network – the 73, 133, 241 and 261 Toll Roads.

The Toll Roads have been providing a choice for drivers for over 25 years and the tolls collected are used to repay the debt incurred to construct the system and fund on-going operations and improvements.

The Toll Roads system, which represents 20% of Orange County’s highways, is the largest toll road network in California.

The Transportation Corridor Agencies (TCA) are two joint powers authorities formed by the California Legislature in 1986 to plan, finance, construct and operate Orange County’s public toll road system comprised of the 73, 133, 241 and 261 Toll Roads, which represents 20% of Orange County’s highway system.