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2/12/2013
U.S. toll roads get 'negative' outlook for fifth straight year
By David Tanner, Land Line associate editor

For the fifth straight year, a global rating agency has given U.S. toll roads a negative outlook.

Moody’s Investor Service predicts modest growth for toll roads in 2013, but it won’t be enough to land a “stable” rating without a boost in traffic.

In its 2013 outlook published Feb. 6, Moody’s said a weakened economy, flat traffic counts and “potential fiscal tightening” by the U.S. government will keep a thumb on toll-road performance in 2013.

“An outlook change to 'stable' would also be possible if toll roads achieve consistent traffic growth and stable financial metrics, including healthy debt service coverage ratios, over the next six months,” Moody’s Senior Vice President Maria Matesanz stated in the outlook. “We expect toll road traffic to grow only modestly in 2013 in tandem with GDP growth.”

A sampling of toll agencies operating in the U.S. confirms that traffic volume was flat in the fourth quarter of 2012.

Without toll increases, toll operator Macquarie Atlas Roads, for example, could have experienced losses because of underperforming traffic volume in 2012, company reports show.

The Australian-based toll operator reported a 1.8 percent decline in traffic on the Dulles Greenway in Virginia, but pulled off a 6 percent increase in revenue in the fourth quarter of 2012 due to toll increases.

On the Chicago Skyway, which Macquarie controls along with Spanish toll operator Cintra, traffic increased a modest 0.7 percent in the fourth quarter while revenue increased 4.1 percent. The joint Macquarie-Cintra venture on the Indiana Toll Road showed a similar small increase in traffic, at 1.4 percent, but a 5.8 percent increase in revenue.

Moody’s said the U.S. economy will continue to dictate how toll roads perform. If the economy takes a step back, or if fuel prices go above $4.50 a gallon, toll roads will not achieve a stable rating anytime soon.

“The user-pay model for funding needed transportation construction projects is gaining acceptance, but the unfettered ability to increase toll rates could also face pressure in a contracting economy,” Matesanz stated.

“A prolonged period of persistently high unemployment, slow wage growth, and declines in discretionary income could have the same effect.”

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