OREANDA-NEWS. April 21, 2015. Fitch Ratings has assigned an 'AA-' rating to Florida Department of Transportation's (FDOT) approximately \\$226 million turnpike revenue bonds series 2015A.

In addition, Fitch has affirmed FDOT's \\$2.8 billion outstanding turnpike revenue bonds at 'AA-'. The Rating Outlook on all bonds is Stable.

KEY RATING DRIVERS

The 'AA-' rating reflects the mainline's standing as a major turnpike with history of strong traffic and increasing revenues and the strength of its service area. The capital improvement plan, while sizeable, has remained on time and on budget. A decreasing debt profile coupled with strong toll revenues results in continued strong coverage over the projection period, and breakeven analysis indicates that the authority could sustain continued substantial revenue declines without jeopardizing debt service.

Revenue Risk - Volume: Stronger
Strategic Importance: Florida's Turnpike Enterprise's (FTE)'s toll roads comprise a critical transportation system with a mature traffic profile and established demand. As a result, toll transactions have grown steadily since 1990; reaching a five-year compound annual growth rate (CAGR) for the period 2009-2014 of 1.8% as a result of increased demand as well as additional lanes and roadways. Fiscal year (FY) 2015 (ended June 30) year-to-date performance for the first seven months has been strong, with transactions and toll revenues rising by 8.8% and 5.8%, respectively, compared to the same period in FY 2014. The network benefits from a strong commuter base that accounts for 95% of total transactions.

Revenue Risk - Price: Stronger
Strong Rate-Making Flexibility: Considerable economic flexibility exists to increase toll rates. Toll rates were increased effective June 24, 2012 for the first time since 2004. Per statute, annual increases indexed to the Consumer Price Index (CPI) will be applied to electronic payers going forward - increases were levied on July 1, 2013 and 2014. Cash rate increases, also linked to CPI, will be implemented every five years. However, additional toll adjustments would also be permitted to meet rate covenant requirements and cover costs.

Infrastructure Development/Renewal: Stronger
Manageable Work Program: The turnpike's 2015-2020 proposed work program totals \\$4.7 billion which assumes approximately \\$1 billion (including the series 2015A) in additional borrowing during this period. While its current program is sizeable, FTE has a strong track record of delivering projects on time and on budget. Furthermore, its asset condition monitoring regime is considered robust.

Debt Structure: Stronger
Conservative Debt Portfolio: The turnpike's debt portfolio consists of fully amortizing, fixed-rate debt.

Financial Metrics:
Low Leverage and Solid Financial Margins: Leverage is moderate, currently being under 4x, and migrating towards becoming below 3x. DSCR increased to 2.80x in FY 2014 due to the indexing of electronic toll rates. Fitch expects DSCR to remain above 2.0x for the foreseeable future after declining to 1.88x and 1.93x in FY 2011 and FY 2012 respectively.

Peers: Maryland Transportation Authority (MdTA)and Pennsylvania Turnpike Commission (PTC) are among FTE's closest peers, each operating strong turnpike systems comprising both urban and rural segments and having considerable pricing flexibility. While FTE and MdTA feature comparable DSCR and leverage profiles leading to ratings at the same level, PTC's higher debt burden and resulting weaker metric profile is the primary cause of its lower rating of 'A+' and 'A-' on first and second liens respectively.

RATING SENSITIVITIES

Negative - Declining Debt Service Coverage: Erosion of DSCR below 2.0x for a sustained period due to lower than anticipated revenues derived from toll increases would put pressure on the rating.

Negative - Financial Flexibility: Increases in leverage beyond historical levels as well as an inability to actively control operating expenses along with costs related to its work program would reflect a weakened credit profile.

Positive - Scale of Capital Plan Limits Near-Term Prospects: Given the scale of FTE's current capital improvement plan, Fitch does not consider there significant near-term likelihood of a positive rating action.

CREDIT UPDATE

The series 2015A bonds include \\$161 million of new money for the capital work program and \\$65 million of refunding bonds for a portion of the series 2005A bonds. The new money proceeds will be used to fund the First Coast Expressway in Clay and Duval counties, the widening of the Veterans Expressway from Memorial Highway to Gunn Highway, and the widening of SR 821 (Homestead Extension) from Hainlin Mill Drive to SR 836.

For more information, please see Fitch's press release 'Fitch Affirms Florida Turnpike Enterprise's Rev Bonds to 'AA-'; Outlook Stable''; dated Dec. 17, 2014 and available at 'www.fitchratings.com'.

SECURITY

Turnpike revenue bonds are secured by a first lien on the gross revenues of the turnpike.