The Port Authority of New York & New Jersey’s extensive spending to rebuild the World Trade Center has led to a downgrade of the agency’s bond rating, meaning it will be faced with significantly higher borrowing costs.
Moody’s Investor Service analysts downgraded Port Authority Bonds from Aa3 to Aa2, affecting $18.2 billion in consolidated bonds. The primary factor in the downgrade was the Port Authority’s share in the redevelopment of the Trade Center, which has cost the authority approximately $2 billion, the Wall Street Journal reported, and raised its debt to revenue ratio. Fears of a downgrade last year prompted the Port Authority to raise its tolls and fares.
The authority had $19.5 billion in debt at the end of last year, up from $9 billion in 2001, and has struggled to complete infrastructure projects due to the massive spending on the memorial, museum, and 1 World Trade Center. A Port Authority spokesman noted that the rating, while downgraded, was “among the highest given by Moody’s to transportation agencies.” [WSJ] – Jane C. Timm