An MTS trolley in downtown San Diego. Courtesy MTS

A top Wall Street ratings agency upgraded the San Diego Metropolitan Transit System’s pension obligation bonds, citing “extremely strong financial performance” despite the pandemic.

S&P Global Ratings upgraded the transit agency’s 2004 bonds to “AA” from “A+.”

“The ‘AA’ long-term rating reflects our opinion of MTS’s very strong enterprise risk and financial risk profiles, as well as its significant sales tax revenues,” S&P said. “Sales tax revenues, which totaled $203 million or 42% of total revenues in fiscal 2020, and other operating grants fund most of MTS’ operations.”

“Consequently, the bulk of MTS’s revenues are not sensitive to ridership declines, partially mitigating the effects of COVID-19,” S&P added.

Pension obligation bonds are issued to cover the unfunded portion of a public agency’s future pension liabilities.

“Achieving this rating upgrade is a testament to the fiscal responsibility and sound management at MTS,” said Supervisor Nathan Fletcher, who chairs the MTS Board. “MTS is being responsible and judicious with the public’s tax dollars and this rating upgrade validates that our financial strategy is heading in the right direction.”

The S&P assessment also credited MTS for “very strong management and governance” and “a record of success in routinely meeting or exceeding its fiscal targets.”

The transit agency was also praised for a robust market position because it operates both buses and trolleys, resulting in “extremely strong financial performance.”

MTS operates 95 bus routes and three trolley lines across 10 cities and unincorporated areas of San Diego county. Frequencies have been restored to near-pre-COVID-19 levels.

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Chris Jennewein

Chris Jennewein is Editor & Publisher of Times of San Diego.