Monday, October 27, 2008

Dulles Greenway Bonds Affirmed with 'BBB' Rating from Fitch Ratings

According to story, Fitch Ratings has affirmed its 'BBB' rating on Toll Road Investors Partnership II, L.P. (TRIP II) Dulles Greenway Project revenue bonds.

The 'BBB' rating reflects the strength of the Loudoun County service area, the strong traffic and revenue growth of the Dulles Greenway Toll Road, the increased flexibility to institute an SCC-approved schedule of toll increases through 2020, moderate economic rate-making flexibility, and the substantial completion of all major construction projects on budget. The Rating Outlook is Stable. The bonds are secured by a net pledge of toll revenue collected at the Greenway's mainline and ramp toll plazas.

The rating also reflects the potential for the previous rapid economic and population growth to slow in Loudoun County, reducing demand on the facility, the increased capacity of free alternative roads, TRIP II's backloaded debt structure with debt maturities extending to 2056, and the potential for additional leveraging.

The SCC has approved rate increases from 2009 through 2012 that would raise the maximum allowable toll from the current cap of $3.00 to $4.00 by 2012. The SCC approved the request for the use of variable pricing that would raise peak hour tolls to $4.80 over the same period. In addition, maximum allowable rates for multi-axle tolls were increased from two times the base toll to a rate based on the number of axles.

Through August 2008, traffic is down 5.1% over the same period in 2007. Traffic in fiscal years 2007 and 2006 were down about 3.8% and 6.6%, respectively. This is the first time annual traffic has decreased since the bonds were issued in 1999.

Year-to-date toll revenue through August 2008 is up 3.1% over 2007 and reflects the $0.30 toll increase in July 2007. Revenue increased 1% in fiscal year 2007, and 21.5% in fiscal year 2006, reflecting the July 2007 and January 2006 toll increases, respectively. Revenue has been maximized through TRIP II's management of the average toll, which has increased from about 76% of the maximum toll in 2004 to 85% in 2005, and 96% in 2006. Revenue has grown at an AAGR of 22% since traffic inception in 1996.

The Dulles Greenway is a 14-mile commuter toll road, which extends from the Dulles Toll Road and the Dulles International Airport to Leesburg, VA. TRIP II is a Virginia Limited Partnership, formed in 1993 for the purpose of developing, constructing and operating the Dulles Greenway toll road project.

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