OREANDA-NEWS. S&P Global Ratings assigned its 'AAA' long-term rating, and stable outlook, to Maryland Department of Transportation's (MDOT) consolidated transportation bonds, series 2016, and consolidated transportation bonds, refunding series 2016. At the same time, S&P Global Ratings affirmed its 'AAA' rating, with a stable outlook, on MDOT's parity debt outstanding.

The rating reflects what we view as:Maryland's diverse, broad-based economy, which contributes to growth in overall pledged revenues; A diverse transportation trust fund revenue stream that is levied statewide (6 million residents); Steady growth in pledged revenues over time, despite some volatility during recessionary periods; Strong coverage from fiscal 2016 pledged taxes (based on unaudited estimates) of pro forma maximum annual debt service (MADS) at almost 6.0x; Prudent management practices; and A rapid maturity schedule, with a statutory maximum maturity of 15 years for transportation bonds. The series 2016 bonds and refunding series 2016 bonds are being issued to provide funding for the MDOT consolidated transportation program for planning and implementation for Maryland's highway, transit, port, and aviation activities and to refund a portion of existing debt.

"The stable outlook is based on S&P Global Ratings' expectation of MDOT's continued steady growth in trust fund revenues and continued strong MADS coverage," said S&P Global Ratings credit analyst Sussan Corson.

We expect MADS coverage to remain above both 2x ABTs, and likely to remain above 3x by pledged taxes, to provide cushion to offset any revenue volatility. The significant increase in state revenue sources to fund MDOT's long-term capital plan is an offsetting consideration to the higher statutory bond cap. If revenues declined substantially and leverage accelerated rapidly lowering the coverage below MDOT's target levels, this could negatively pressure the rating.