KBRA assigns a long-term rating of AA- to the Pennsylvania Turnpike Commission Turnpike Revenue Bonds, Series C of 2024.

KBRA additionally affirms:

• The long-term rating of AA- for the Commission's outstanding Turnpike Revenue Bonds
• The long-term rating of A+ for the Commission's outstanding Turnpike Subordinate Revenue Bonds
• The long-term rating of AA- for the Commission's outstanding Motor License Fund-Enhanced Turnpike Subordinate Special Revenue Bonds

The Outlook for each obligation is Stable.

Key Credit Considerations

The rating actions reflect the following key credit considerations:

Credit Positives

• The Pennsylvania Turnpike System is a highly essential, statewide, regional toll road system with limited competition.
• The Commission has full rate setting autonomy which, together with prudent finance management and controls, has supported strong margins and stable debt service coverage.
• Liquidity is ample.

Credit Challenges

• The Commission’s O&M, capital and existing debt obligations, including its outstanding Act 44/89 obligations, are substantial and require annual toll increases, the cumulative effect of which may at some point dampen traffic demand, reducing operating margins and financial flexibility.
• The planned issuance of $4.0 billion in senior obligations per the 10-year capital plan may pressure subordinate obligation coverage if actual traffic demand is materially weaker than forecast, although the Commission’s capital plans remain flexible if traffic volumes are not consistent with forecasts.

Rating Sensitivities

For Upgrade

• A sustained trend of increasing net revenue resulting in debt service coverages well in excess of the Commission’s targets of 2.0x annual debt service on senior lien, 1.30x combined annual senior and subordinate debt service and 1.20x annual debt service for all obligations.

For Downgrade

• A sustained decline in net revenue DSCRs below the Commission’s targets for all obligations.

To access rating and relevant documents, click here.

Methodologies

• Public Finance: U.S. Public Toll Roads, Bridges & Tunnels Revenue Bond Rating Methodology
• Public Finance: U.S. Special Tax Revenue Bond Rating Methodology
• ESG Global Rating Methodology

Disclosures

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Only those ratings on securities issued by this Issuer that also are denoted on the Security Ratings tab for this Issuer on KBRA.com as “endorsed” by Kroll Bond Rating Agency Europe Limited into the European Union and/or by Kroll Bond Rating Agency UK Limited into the UK are covered by the disclosures set forth in this press release and the corresponding Information Disclosure Form. No other ratings on issuances by this Issuer have been endorsed into the European Union or the UK, and the disclosures set forth herein and in the corresponding Information Disclosure Form are inapplicable to those ratings and may not be used for regulatory purposes by European Union or UK investors in these securities.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.

Doc ID: 1004585

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