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Bridge collapse won’t affect Maryland credit ratings, S&P says

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(The Center Square) – The collapse of the Francis Scott Key Bridge won’t affect the credit quality of Baltimore, the state of Maryland or the Maryland Transportation Authority, a credit-rating agency said Tuesday.

S&P Global Ratings said it expects support from all sectors in the wake of the collision and collapse.

“S&P Global Ratings expects receipt of federal, state, and local assistance, in addition to insurance reimbursements, will provide credit stability in the near term,” according to a report published Tuesday.

A Singapore company’s cargo ship crashed into Baltimore’s Francis Scott Key Bridge in the early morning hours Tuesday. The ship had lost power and alerted authorities before the crash, which allowed officials to stop the flow of traffic onto the bridge.

The long-term outlook was less clear.

“The long-term financial impact, particularly for MDTA, will likely be unknown for some time,” according to the report.

S&P said MDTA was a “diverse, multiasset system that achieves robust financial margins.” The report also noted that MDTA had $889 million in available reserves as of the fiscal year ended June 30, 2023.

“This level of reserves, in our view, provides MDTA with a sizable cushion to offset temporary revenue losses from the bridge collapse,” according to the report. “However, potentially negative revenue trends and large capital needs resulting from bridge reconstruction could weaken the authority’s creditworthiness. We will continue to monitor the financial impacts of the bridge collapse and the extent of state, local, and federal assistance to MDTA.”

Toll revenues from the bridge hit $56.1 million in fiscal 2023, about 7.4% of the authority’s $755.7 million of annual toll revenues, according to S&P.

The Francis Scott Key Bridge is one of seven toll facilities designated as Transportation Facilities Projects under the trust agreement securing MDTA’s outstanding toll revenue bonds. The authority had about $2.8 billion of toll revenue bonds outstanding as of fiscal year-end 2023, according to the report.

The state also could avoid credit issues as a result of the collapse.

“The state’s long history of proactive financial and budget management and strong reserves should address any potential fiscal pressures,” according to the report. “In addition, we do not expect the bridge collapse and temporary closure of the Port of Baltimore will have a material impact on expenditures in the state’s general fund, particularly given the likelihood of federal emergency support.”

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