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Fitch Ratings expects to assign a 'BBB-' rating to the $457 million series 2013 tax-exempt private activity bonds (PABs) to be issued by the New Jersey Economic Development Authority on behalf of NYNJ Link, the developer selected to build the Goethals Bridge Replacement Project.

Additionally, Fitch expects to assign a 'BBB-' rating to the approximate $480 million Transportation Infrastructure Finance and Innovation Authority (TIFIA) loan to NYNJ Link.

The PABs are expected to price in November 2013. The TIFIA loan is expected to be executed in November 2013.

The project, based on availability payments, present low operational risk according to Fitch. The developer, formed by Macquarie Infrastructure and Real Assets (MIRA) (90% interest) and Kiewit Development Company (KDC) (10% interest), has extensive experience managing assets in the public private partnership space.

Fitch said that the debt service profile consists of fixed rate debt with no refinance risk and the covenant package is considered to be adequate. The firm considers that coverage ratios are sufficient but the project presents high leverage (16x net debt to cash flow available for debt service in 2018). NYNJ Link LLC will be contributing equity of $113 million or 9.2% of total project cost.

The contractor formed by Kiewit Infrastructure Co. (70%), Weeks Marine Inc. (15%), and Massman Construction Co. (15%)is considered to have significant experience with similar projects. Additionally, the security package includes parent guarantee from Kiewit Infrastructure Group Inc.

The PABs will be secured by a first priority lien on NYNJ Link net revenues. The TIFIA Loan will be secured on a subordinate basis.

Construction is expected to take 50 months from financial close followed by a 35-year operating period. The project involves the design, construction, financing, operation, maintenance and rehabilitation of a replacement Goethals Bridge connecting Staten Island in New York City with Elizabeth in New Jersey as well as the demolition of the existing Goethals Bridge.

The project includes the construction of a new six-lane cable-stayed main span bridge, construction of new approach structures and realignments to link to the existing road network and the demolition and removal of the existing Goethals Bridge. While both the existing bridge and the replacement bridge will be tolled, the tolls are to be collected and retained by the PANYNJ and are not pledged as part of this financing.