MARTA
The Metropolitan Atlanta Rapid Transit Authority is coming to market with a triple-A-rated negotiated sale of green bonds to refund issuances from 2020 and 2021 while also financing a major upgrade to its rolling stock.
“When I stepped onto that new train this morning, it felt like stepping into the future,” MARTA General Manager and CEO Collie Greenwood said at a Jan. 30 event where the agency showed off the first of its new equipment for its rail transit system.
“These new railcars are an inspiration to everyone at MARTA and to our customers who will get to experience a cleaner and safer ride and hopefully one that shows them how transit can make their lives easier and their trip more enjoyable,” he said.
The issuance is divided into two tranches of sales tax revenue bonds, $331.7 million of series 2025A and $143.2 million of series 2025B.
The larger portion will be used for financing various capital projects, including the new cars, while enhancing safety and maintaining the system.
In November 2019, the board approved the purchase 224 new rail cars from Stadler Rail. Stadler, a Swiss firm with train assembly operations in Utah,
After testing, the first trains are expected to enter service by late 2025, with the full fleet operational in three and a half years, according to the deal’s preliminary official statement. The system has a 296-car fleet today.
The B series will be used to refund a portion of the outstanding series 2020B bonds and series 2021D bonds, subject to market conditions, and purchase a portion of the outstanding series 2020B bonds.
MARTA is also taking advantage of current market dynamics to generate debt service via a partial tax-exempt refunding of certain 2020B and 2021D taxable bonds,” according to an online investor presentation about the deal.
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The new deal’s series A has an optional redemption on January 1, 2035, at par value. The series B is not subject to optional redemption before the final 2038 maturity, according to the presentation. Both series are exempt from federal and Georgia state income taxes.
Senior manager Wells Fargo Securities plans to price the deal Feb. 12 and it is scheduled to close Feb. 25.
A Kestrel-approved verifier has determined that the series 2025AB bonds are in conformance with the four core components of the International Capital Market Association green bond principles.
The bonds are financing “clean transportation,” which includes acquiring electric trains and busses and renovating MARTA’s rail stations.
Jefferies and J.P. Morgan are listed as co-senior managers. Blaylock Van, Estrada Hinojosa, and Stern Brothers are managers. Holland & Knight is the bond counsel. PFM is financial advisor.
The bonds carry AAA ratings from S&P Global Ratings and Kroll Bond Rating Agency.
“The long-term rating reflects the priority of payment of MARTA Sales Tax Revenue Bonds from pledged gross receipts, the historic strength and resilience of the underlying pledged revenue base, the strong pro forma coverage of 4.57x maximum annual debt service from fiscal year 2024 pledged receipts and, the conservative additional bonds test requiring prior year receipts equivalent to at least 2.0x MADS,” KBRA said.
“The rating reflects our view of MARTA’s broad and diverse local economy, supported by the healthy and expanding large Atlanta metropolitan statistical area pledged revenue source,” said S&P Global Ratings credit analyst Andrew Stafford.
“Relatively low volatility has exhibited robust growth trends and resilience through weaker economic cycles, very strong coverage and liquidity that we expect will remain so, and linkage that we view as having a limited relationship to the obligor’s creditworthiness,” he said.
Fitch Ratings and Moody’s Ratings were not hired to rate the deal. Fitch rates MARTA AA-plus and Moody’s rates it Aa2.
The bonds will be secured by a combination of pledges and liens on sales tax receipts from Fulton, DeKalb and Clayton counties and the city of Atlanta. There’s also a pledge and lien tied to ad valorem taxes on motor vehicles to be paid by the same counties.
The Atlanta region’s growing population and strong demographics underpin sales tax revenue growth, MARTA says in the investor presentation, with the area’s population going from 4.33 million in 2015 to more than 5 million in 2022.
In 2024 sales tax revenues reached an all-time high of $721.5 million. MARTA’s sales tax revenue more than doubled from fiscal years 2014 to 2024.
MARTA
MARTA was created in 1965 to serve the city and surrounding counties. The authority is governed by a 15-member board with 13 voting members. The system includes light and heavy rail passenger service, buses, and mobility transit vans.
The core of the system is its 47.6-mile heavy rail transit system with 38 stations on two lines.
The flow of funds is tied to a set of bond covenants stipulating that revenues for 12 out of 15 months must be at least 2x the annual debt service. Transit related revenues received during each fiscal year must be no less than 35% of the operating expenses from the prior fiscal year.
As of January 1, 2025, MARTA has approximately $1.9 billion of outstanding senior lien debt.
The authority’s existing debt amortizes relatively rapidly with 41% of principal amortizing over the next 10 years, according to the investor presentation. MARTA also maintains a $300 million commercial paper program secured by a subordinate lien on sales tax revenue.
“Although MARTA’s capital plan conservatively estimates $3.0 billion in additional long-term debt issuances in fiscal years 2026 through 2033, we believe headroom as reflected by current coverage metrics, the resilience of pledged sales tax and TAVT revenues, and board restrictions on additional issuance will continue to support very strong coverage at the current rating level,” S&P wrote.
“We also note that the authority does not expect the estimated $3.0 billion in additional debt to fully materialize, as MARTA has been able to use cash to pay for ongoing capital needs over the past four years and expects to continue to do so.”