TfL urges capital clarity after ratings upgrade

London’s transport agency, Transport for London (TfL), has called on the government to provide long-term certainty over its capital budgets, after receiving a boost from ratings agency Moody’s.

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TfL’s long-term senior unsecured debt ratings have been upgraded by Moody’s, to A3 from Baa1, as the organisation has shown a strong recovery in passenger numbers since the Covid-19 pandemic decimated ridership.

“The key driver of the improvement in TfL's operating performance is the faster-than-expected recovery in passenger numbers, reaching 90% of pre-pandemic levels since the beginning of fiscal 2024,” said Moody’s, which also pointed to the opening of the Elizabeth Line (formerly known as Crossrail) as another benefit to the transport agency.

However, the upgrade prompted a call from TfL’s chief financial officer, Rachel McLean, for the government to work with the organisation to provide a long-term plan for capital investment in the city’s transport infrastructure.

“We are pleased that Moody’s has upgraded our long-term debt ratings and has changed our rated outlook from stable to positive,” she said.

“We continue to discuss with government our capital investment needs for the future, both for 2024/25 and the longer term, which government has always acknowledged will be an ongoing requirement for TfL as for other transport providers. Certainty over this capital investment support is absolutely vital to continue to grow ridership, maintain services and assets and support jobs and economic growth around the country through our supply chain.”

A number of significant projects, such as Crossrail 2 and the Bakerloo Line extension, were shelved in the wake of the pandemic, with central government money being provided to keep the agency afloat as revenue from fares plummeted due to a collapse in ridership. 

The funding agreement with government is due to come to an end in March next year, and Moody’s said it expects the improved operating performance will remove the need for financial support after the current agreement ends.