Fitch says most tollers not threatened by finance volatility, short-term

Fitch Ratings say that most US toll authorities are only moderately exposed to current financial dislocations in variable and auction rate securities. They say most revenue backed securities are substantially hedged, offsetting much of the effect of jumps in rates. They say that the extent of failed auctions and rate spikes has been "unprecedented".

Refinancing out of the variable rate paper is being looked at by some, Fitch says, but this can be difficult, slow and expensive in the current volatile environment.

They say they have been surveying issuers of variable rate debt and their exposure. They say that most of those at immediate risk are BBB or lower in rating already. They don't see a need to downrate many at present.

If current market difficulties continue long enough some of those higher than BBB could be dragged down, Fitch say.

Tollers are covered by this statement from Fitch:

"Many issuers of transportation revenue bonds Fitch rates have a moderate degree of variable rate debt, most of it hedged. Issuers of municipal bonds backed by the revenues of startup facilities currently have very little variable rate exposure and virtually all of it is hedged.

"With plans already in place among most entities to refinance poorly performing variable-rate debt, the costs are manageable in the short term, particularly given that most issuers have adequate liquidity and debt service reserve funds. However, if the current market conditions persist, the impact will be more significant, particularly if internal liquidity is diminished."

TOLLROADSnews 2008-03-11