KBRA assigns a long-term rating of AA- with a Stable Outlook for the Turnpike Authority of Kentucky Economic Development Road Revenue Refunding Bonds (Revitalization Projects) 2024 Series A. Concurrently, KBRA affirms the AA- rating and Stable Outlook on the Authority’s outstanding Economic Development Road Revenue Bonds (Revitalization Projects).

Key Credit Considerations

The rating was affirmed because of the following key credit considerations:

Credit Positives:

• The Road Fund revenues that provide for lease rental payments can only be used for transportation purposes.
• The Commonwealth’s use of lease financing is the primary funding mechanism for essential purpose road and highway infrastructure.

Credit Challenges:

• Wealth and income metrics lag both the region and the U.S.
• Road Fund revenues are subject to economic volatility, although there is a statutory floor on Motor Fuel Tax revenues.

Rating Sensitivities

For Upgrade:

• Material improvement in coverage due to an increase in available Road Fund Revenues and/or a reduction in annual lease rental payments.
• The imposition of additional covenants that provide further bondholder protection.

For Downgrade:

• Significant reduction in debt service coverage levels due to decline in available Road Fund Revenues and/or the issuance of additional debt.
• Any failure on the part of the Commonwealth to biennially renew the lease or to appropriate lease rental payments.

To access rating and relevant documents, click here.

Methodologies

• Public Finance: U.S. Special Tax Revenue Bond Rating Methodology
• Public Finance: U.S. State Annual Appropriation Obligation Rating Methodology
• ESG Global Rating Methodology

Disclosures

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.

Doc ID: 1004491

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