(Bloomberg) -- New York's Metropolitan Transportation Authority needs more help from the federal and state governments to ensure it can keep paying bondholders as ridership plummets because of the coronavirus, agency head Pat Foye said Tuesday.
“We expect to make every principal and interest payment -- we're not asking for forgiveness from our creditors,” he said during an appearance on The Brian Lehrer Show on WNYC.
“We're obviously one of the largest borrowers in the muni market and the MTA making its principal and interest payments is incredibly helpful to the overall market,” said Foye, who is recovering from Covid-19. “To be able to do that, we're going to need additional support from the federal government and we're going to have to come up with a plan that we're hard at work on, which will also include some non-financial legislative changes in Albany.”
The MTA, which runs the nation's largest public transportation system, has seen subway ridership fall nearly 90% and the number of passengers on its Metro-North Railroad has fallen 94%. The agency is losing an estimated $125 million each week in fare and toll revenue, leading it to boost its short-term loan capacity to $3 billion from $1 billion to help raise cash.
Following Foye's WNYC interview, the MTA issued a statement saying it has sufficient funds to cover debt-service payments.
“MTA has sufficient liquidity and resources to fund its debt service accrual requirements even as the ongoing COVID-19 crisis has put significant strain on MTA's financial condition, and we are committed to continuing disclosure of material events on a timely basis,” Bob Foran, MTA's chief financial officer, said in a statement.
Congress approved $25 billion for mass-transit systems throughout the U.S. in its $2 trillion economic stimulus package. The MTA, which has more than $45 billion of debt outstanding, will receive $4 billion of those funds to help cover lost revenue and growing expenses.
The agency is working on a “survival financing plan” to help it going forward, Foye said. The MTA tapped $1 billion of bank loans this month. It has about $3.8 billion of liquidity resources, including the bank loans, a cash balance of $1.2 billion and internal flexible funds of $1.2 billion.
S&P Global Ratings last week downgraded the MTA one step to A-, the fourth-lowest investment grade, due to the financial challenges the agency faces from the pandemic. Moody's Investors Service is reviewing the agency for a potential downgrade.
MTA debt that comes due in November traded for a little over 100 cents on the dollar Tuesday to yield about 3.9%, according to data compiled by Bloomberg, indicating little concern among investors that they won't be repaid.
The MTA has fewer workers to help run the system because 582 employees have tested positive for the coronavirus and eight workers have died, according to Foye. The agency started a 50/50 program where half of its employees are working and the other half are at home, he said.
The MTA started a reduced service on Wednesday. While there are fewer healthy workers to keep running the system, Foye said he anticipates continuing running subways, buses and commuter trains.
“The MTA workers are performing heroically given this challenge and are rising to the occasion of taking first responders and essential workers to and from their jobs,” Foye said during the radio program. “And we're going to continue to do that throughout this entire pandemic.”
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