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San Francisco Bay Area Rapid Transit Dist, CA -- Moody's assigns Aaa to San Francisco Bay Area Rapid Transit District's (CA) 2020 GO Bonds Series C-1 & C-2; outlook is stable

·13 min read

Rating Action: Moody's assigns Aaa to San Francisco Bay Area Rapid Transit District's (CA) 2020 GO Bonds Series C-1 & C-2; outlook is stable

Global Credit Research - 06 Aug 2020

New York, August 06, 2020 -- Moody's Investors Service has assigned a Aaa rating to San Francisco Bay Area Rapid Transit District, CA's $590.115 million General Obligation Bonds (Election of 2016), 2020 Series C-1 (Green Bonds) and $109.885 million General Obligation Bonds (Election of 2016), 2020 Series C-2 (Federally Taxable) (Green Bonds) with a total estimated par amount of $700.0 million. Concurrently, we affirmed the district's Aaa rating affecting $1.2 billion in outstanding general obligation (GO) bonds. The outlook is stable.

RATINGS RATIONALE

The Aaa rating reflects the San Francisco Bay Area Rapid Transit District's (BART) exceptionally large and diverse tax base that encompasses a major component of the Bay Area economy, and favorable wealth profile of service area residents. The rating additionally reflects the healthy financial metrics of the district, including six years of consecutive operating surpluses and strong liquidity, all of which position the district well to manage through the current economic challenges due to the coronavirus pandemic. The district's large capital needs as well as its moderate pension and OPEB burdens have also been factored into the rating. The rating also incorporates the above average legal strength of the general obligation bonds, including a statutory lien and "lock box".

We regard the coronavirus outbreak as a social risk under our ESG framework, given the substantial implications for public health and safety. The coronavirus crisis is not a key driver for this rating action. Given its currently strong reserves and receipt of federal aid, BART is not susceptible to immediate material credit risks related to coronavirus. However, the situation surrounding coronavirus is rapidly evolving and the longer-term impact will depend on both the severity and duration of the crisis.

RATING OUTLOOK

The outlook on BART's bonds is stable based on the expectation that the district's resources, including supplemental federal aid will be sufficient to weather the coronavirus-induced economic downturn.

FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS

- Not applicable

FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS

- Decrease in federal support for local transit operations

- Significant deterioration in the district's financial position

- Greater than expected rise in leverage position, including debt, pensions and OPEB

LEGAL SECURITY

The general obligation bonds are secured by a voter-approved unlimited property tax pledge encompassing the three district counties. The City and County of San Francisco (Aaa negative) and Contra Costa County (Aa2 stable) have adopted the Teeter Plan, which ensures that BART will receive 100% of the debt service proceeds required to make debt service on the general obligation bonds. While Alameda County (Aaa stable) has adopted the Teeter Plan, its Teeter Plan does not apply to general obligation bond collections. Property tax revenues levied for general obligation bond debt service are delivered directly to the GO bond's trustee in the case of all three BART Counties.

USE OF PROCEEDS

The 2020 Series C-1 and 2020 Series C-2 bonds represent the third issuance of Measure RR GO Bonds. Proceeds of the bonds will go towards track replacement, tunnel repair, train control and electrical system upgrades to allow more frequent and reliable service.

PROFILE

The district was created in 1957 to provide rapid transit service to the San Francisco Bay Area and is governed by an elected nine member Board of Directors. The district is composed of Alameda and Contra Costa Counties, as well as the City and County of San Francisco. System ridership totaled over 83 million passengers in 2020. The system has 131 miles of dual mainline track, 50 stations, and approximately 47,200 parking spaces.

METHODOLOGY

The principal methodology used in these ratings was US Local Government General Obligation Debt published in July 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBM_1230443. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.

For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.

These ratings are solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1133569.

The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the EU and is endorsed by Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Alexandra Cimmiyotti Lead Analyst Regional PFG West Moody's Investors Service, Inc. One Front Street Suite 1900 San Francisco 94111 US JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 William Oh Additional Contact Regional PFG West JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Releasing Office: Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653

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