KBRA downgrades the long-term rating to AA-, from AA, for the Pennsylvania Turnpike Commission's outstanding Oil Franchise Tax Senior Revenue Bonds and assigns a long-term rating of AA- to the Commission's Oil Franchise Tax Senior Revenue Bonds, Series A of 2025.

KBRA additionally downgrades the long-term rating to A+, from AA-, for the Commission's outstanding Oil Franchise Tax Subordinated Revenue Bonds and assigns a long-term rating of A+ to the Commission's Oil Franchise Tax Subordinated Revenue Bonds.

The rating Outlook is revised to Stable, from Negative.

Key Credit Considerations

The rating actions reflect the following key credit considerations:

Credit Positives

• Established track record for effective collection and adjustment of the OFT as well as timely distribution of the Commission Allocation.
• Statutory price floor of $2.99 per gallon used in calculation of the OFT tax rate insulates collections from motor fuel price volatility.
• Legal and statutory framework provides strong levels of bondholder protection at the senior obligation level.

Credit Challenges

• Formula driven Commission Allocation is subject to fuel consumption volatility and to periodic adjustments of the effective fuel tax rate by the legislature.
• Absent Legislative action to adjust pledged revenues, the downward trend in motor fuel consumption experienced over the last decade is likely to continue, pressuring pledged receipts and debt service coverage over time.

Rating Sensitivities

For Upgrade

• Sustained increase in motor fuel consumption leading to increased Commission Allocation revenues.

For Downgrade

• Decline in MADS coverage to a level no longer consistent with the rating level due to factors including a continuing, secular decline in motor fuel consumption and/or additional borrowing.
• Failure of the Commonwealth to maintain the statutory average annual price of fuel, a key component in determination of the OFT levy each year.

To access ratings and relevant documents, click here.

Methodologies

• Public Finance: U.S. Special Tax Revenue Bond Rating Methodology
• ESG Global Rating Methodology

Disclosures

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Only those ratings on securities issued by this Issuer that also are denoted on the Security Ratings tab for this Issuer on KBRA.com as “endorsed” by Kroll Bond Rating Agency Europe Limited into the European Union and/or by Kroll Bond Rating Agency UK Limited into the UK are covered by the disclosures set forth in this press release and the corresponding Information Disclosure Form. No other ratings on issuances by this Issuer have been endorsed into the European Union or the UK, and the disclosures set forth herein and in the corresponding Information Disclosure Form are inapplicable to those ratings and may not be used for regulatory purposes by European Union or UK investors in these securities.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA), one of the major credit rating agencies (CRA), is a full-service CRA registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a Designated Rating Organization (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan’s Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.

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