Press Release|Public Finance
KBRA Affirms AAA Rating with Stable Outlook to New Mexico Finance Authority State Transportation Revenue Bonds (State Transportation Commission - Senior Lien and Subordinate Lien)
22 Mar 2024 | New York
KBRA affirms the long-term rating of AAA to the New Mexico Finance Authority State Transportation Revenue Bonds (State Transportation Commission - Senior Lien). Concurrently, KBRA affirms the long-term rating of AAA to the Authority's State Transportation Revenue Bonds (State Transportation Commission - Subordinate Lien). The Outlook on both liens in Stable.
Key Credit Considerations
The rating was affirmed because of the following key credit considerations:
Credit Positives
- Based on FY 2023 Pledged Revenues, projected Senior Lien MADS coverage does not fall below 16.3x (in FY 2027), and projected aggregate Senior and Subordinate Lien MADS coverage does not fall below 5.40x (in FY 2024).
- Debt amortization is rapid, with all bonds fully amortized by 2032.
- The Indenture’s 3.5x Senior Lien and 3.0x Subordinate Lien Additional Bonds Test provide strong protection against overleveraging. Furthermore, no additional Senior Lien or Subordinate Lien debt issuance is authorized under the Act, other than refunding issuance.
Credit Challenges
- The State’s economic dependence upon the energy sector may present longer-term vulnerabilities.
- State wealth levels are below the national average.
- The bonds are subject to the periodic risk of non-reauthorization of FAHP funding. This risk is mitigated, in KBRA’s view, by the strength and stability of the state revenues component of Pledged Revenues.
Rating Sensitivities
For Upgrade
- Not Applicable
For Downgrade
- Pronounced decline in the collection of Pledged Revenues and resultant coverage levels.
To access rating and relevant documents, click here.