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Moody: River of debt could make us downgrade T bonds
By adamg on Thu, 08/09/2012 - 12:23pm
The Boston Business Journal reports the bond-rating agency is reviewing MBTA finances, with a possible eye toward reducing its bond rating, which could lead to still higher costs for the T if it tries to borrow money. The T's reliance on state sales-tax revenue and pass bond-financing schemes are of particular concern, the Journal reports.
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Comments
They might be doing us a favor
Remember when the US lost its AAA rating? Well, since then, interest rates have stayed down. People are currently willing to give money away for nothing, or even negative return, to the Fed.
I think, if anything, it proved that Moody's and the rest of the rating agencies are full of shit.
Sure, but the US isn't the MBTA.
Sure, but the United States Federal Government and the MBTA are very different organizations. The United States Federal Government is probably the most important borrower in the entire global economy, with a truly giant amount of debt floating around and a very long track record of paying its bills on time. As such, any lending organization worth its salt is going to have its own independent opinion of how trustworthy the United States is as a lender. The MBTA is a vastly smaller organization, and an organization without the advantages of being a sovereign nation, and as such is more sensitive to shit like this.
But you're not necessarily wrong either. Financial institutions have to take any rating change with a grain of salt. But still, ratings still count for something.
Who was buying MBTA bonds in
Who was buying MBTA bonds in the first place?
You were.
If you have a retirement fund, there's a decent chance you probably at one time owned or currently do own MBTA bonds.
It's not like someone goes down to the bank and says "Hi, I'd like to buy $500 of municipal debt for Ames, IA.
shush
Let the neanderthal think that his gold coin collection is the only real financial commodity worth a lick of salt.
Make Somerville pay for Green Line Extension
If free market pricing was used, Somerville would pay for the bond to increase service quality to their city, upgrading from bus to rapid transit. The MBTA will then just eat the increased operating cost (loss) from the expansion. The GLX mostly benefits condo developers and property owners in Somerville, and thus their property tax revenues for the added attraction of having nearby subway stations and noise walls erected where none exist now.
The lawsuit forcing the money waste needs appeal. Did the big dig actually worsen air quality in Somerville? Didn't Somerville (and Cambridge) worsen air pollution much more by making streets harder to drive, with more stop and go and waiting with engines running? The big did didn't make I-93 any less of a bottleneck. Traffic that was on McGrath Highway and Rutherford moved to I-93, so there was little or no actual traffic increase worsening air in Somerville.
MBTA FY2013 budget
budget request = $1.766 billion
total debt service = $437 million or roughly 25%