Texas I-35E managed lanes TIFIA loan rating confirmed as construction pressure tests traffic

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Texas I-35E TIFIA loan rating

Highlights

Morningstar DBRS confirms the rating on the 35.5-year $285 million TIFIA revenue loan for Texas I-35E managed lanes despite a 10.6% traffic decline.
Toll revenue drops only 2.4% for the 12 months ended November 2025, with dynamic pricing during peak periods offsetting most of the lower transaction volume caused by construction.
Even with a projected 22.0% annual toll revenue decline in 2026, the TIFIA debt service coverage ratio stays above 2.5x and over $120 million in reserves strengthen liquidity.

Rating rationale amid traffic declines

As reported by Morningstar DBRS, the rating action applies to the 35.5-year $285 million revenue loan issued under the Transportation Infrastructure Finance and Innovation Act program to help fund the Texas Department of Transportation's Interstate Highway 35 East managed lanes project. The corridor spans about 28 miles, including roughly 17 miles of managed lanes.

For the 12 months ended November 2025, the project posts a TIFIA debt service coverage ratio of about 4.2x, supporting the rating confirmation despite a 10.6% drop in total traffic from the same period in 2024. The decline reflects ongoing Phase 2 construction on the southern section of the managed lanes, which temporarily reduces capacity through narrower lanes, lower speeds, limited access, and fewer gantries.

Morningstar DBRS says the traffic and toll revenue impact is more pronounced than initially projected because the removal of a toll gantry was not anticipated in CDM Smith's assessment of construction effects. Even so, toll revenue falls by a smaller 2.4% over the same 12-month period, indicating dynamic pricing during peak periods partially offsets lower toll transactions.

Liquidity and 2026 revenue outlook

Traffic remains under pressure in the first quarter of 2026, especially in January when winter storms force the managed lanes to close for 10 days. January traffic volume and toll revenue decline 24.2% and 19.5% month to month, respectively, before traffic rebounds 26.2% in February 2026 and 14.1% in March 2026 after reopening.

Still, first-quarter 2026 traffic volume and toll revenue are down 22.7% and 22.0%, respectively, from Q1 2025. CDM Smith indicates annual traffic and toll revenue in 2026 are likely to follow trends similar to those seen in 2025, although future construction timing, closure patterns, fuel prices, and travel demand linked to the 2026 FIFA World Cup could affect performance.

Morningstar DBRS says that even under a conservative assumption that 2026 annual toll revenue falls 22.0% from 2025, the TIFIA debt service coverage ratio would remain above 2.5x, higher than its projected minimum of 2.4x. The agency also highlights more than $120 million in reserves and other funds as of May 31, 2026, underscoring the project's financial flexibility and debt-servicing strength.

Our earlier coverage of Morningstar DBRS’s annual review of Globaldrive Auto Receivables UK 2020-A noted the agency’s confirmation of the A (sf) rating on the Class A Notes. The review pointed to still-low arrears and delinquencies during the revolving period, alongside slightly higher cumulative defaults and an increased loss-given-default assumption due to weaker recoveries, while credit enhancement and liquidity support remained stable ahead of the June 2026 revolving period end.

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