News Story

CENTENNIAL (S&P Global Ratings) Aug. 5, 2022--S&P Global Ratings raised its long-term rating to 'AAA' from 'AA+' on the Sacramento Transportation Authority (STA), Calif.'s Measure A sales tax revenue bonds outstanding. At the same time, S&P Global Ratings raised the long-term component of its dual rating to 'AAA' from 'AA+' on the authority's series 2015A and 2014A Measure A sales tax revenue bonds (AAA/A-1), reflecting the authority's priority lien pledge and a standby letter of credit provided by Sumitomo Mitsui Banking Corp., and on the authority's series 2009C Measure A sales tax revenue bonds (AAA/A-1+), reflecting the authority's priority lien pledge and a standby bond purchase agreement provided by U.S. Bank National Assn. Finally, we assigned our 'AAA' long-term rating to the authority's proposed $23 million Measure A sales tax revenue refunding bonds, series 2022. The outlook is stable.

"The rating action reflects our expectation that STA will maintain extraordinarily strong maximum annual debt service coverage at more than 4x given the lack of additional debt plans, sales tax revenue growth, and the voter-approved expenditure plan ordinance that limits debt service." said S&P Global Ratings credit analyst Kayla Smith.

Bond proceeds will be used to refund the $30.4 million series 2012A bonds outstanding for an estimated net present value savings of $1.5 million.

The stable outlook reflects our expectation that coverage will remain what we consider extraordinarily strong (at more than 4x) given strong sales tax revenue growth and a lack of additional debt plans.

We view physical risks as moderately negative in our credit rating analysis given the authority's exposure to wildfire and seismic risks. We analyzed the authority's social and governance risks and determined that they are credit neutral.