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Rail News Home Passenger Rail

8/21/2002



Rail News: Passenger Rail

DART's $100 million long-term bonds receive 'AA' rating from Fitch


Fitch Ratings Aug. 20 assigned a "AA" rating to Dallas Area Rapid Transit’s $100 million Senior Lien Sales Tax Revenue Bonds, Series 2002, which DART officials plan to sell the week of Aug. 26 through a syndicate headed by Siebert Brandford Shank & Co.



Sale proceeds would be used to finance $100 million in outstanding DART Senior Subordinate Lien Sales Tax Revenue Commercial Paper Notes, Series 2001.



The area DART serves is economically strong, able to create and sustain employment, and has better-than-average household incomes and retail sales, according to Fitch’s prepared statement.



"The balance struck between operating and capital needs provides adequate insulation to manage through any unexpected volatility in sales tax collections and greater-than-expected operating expenses," Fitch stated, adding that this confirmed an earlier opinion.



But Fitch credits DART’s management for maintaining bondholder security. DART’s FY03 budget includes fare increases and, over five years, reduces capital spending about $400 million — mainly by delaying spending rather than eliminating projects. Other cost containment measures decreased the budget gap by another $20 million.



Although the drop in sales tax receipts is lasting longer and extended deeper into DART’s financial base than has been experienced in the past 20 years, Fitch Ratings evaluators believe the Dallas area’s financial strength and the ability of DART’s management team to respond appropriately mitigate risk to bondholders.


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