News Column

Fitch: U.S. Ports Continue to be Low Risk; Resilient Cash Flows Buttress Against Volume Volatility

June 25, 2014



NEW YORK--(BUSINESS WIRE)-- The 'A' category remains the most common rating for stand-alone U.S. ports, reflecting relatively low credit risk and the resilience of cash flows despite volume fluctuations during economic downturns, according to a new Fitch Ratings report.

'With approximately 95% of port sector ratings maintaining Stable Outlooks, Fitch expects stable rating trends in the near to immediate future,' said Emma Griffith, Director in Fitch's Global Infrastructure Group.

Highest rated ports are typically those with a strong underlying market or franchise driving demand, overall stability of cash flows through contractual agreements, or tariff policy and healthy financial metrics. Weakest rated ports include those serving weaker markets with competition for cargo, less contractual protection for revenues, or thinner financial metrics.

Approximately 62% of Fitch-rated U.S. ports have a midrange assessment for revenue risk. Of the remaining credits, 19% were assessed stronger while 19% were assessed weaker. Ports with stronger assessments for this attribute are typically primary ports of call with a stable demand profile in their local market and strong competitive position in the supply chain.

Approximately 25% have a stronger assessment for revenue risk, while approximately 63% achieved a midrange assessment. Ports with a stronger assessment score maintain robust contractual agreements with many leading users/tenants and can demonstrate a relatively low degree of revenue volatility despite changes in throughput levels.

Approximately 25% achieved a stronger assessment for capital improvement planning and funding sources. A stronger score indicates a well-managed and prioritized capital improvement program that addresses both infrastructure renewal needs and capacity enhancements to meet future demand. Ports with a midrange attribute assessment, or 69% of Fitch's stand-alone rated U.S. ports, have adequate infrastructure in place with capacity to meet future long-term demands. Midrange assessments span all rating categories for U.S. ports from 'AA' to below investment grade.

For risk derived from debt structure, assessments were split between the midrange and stronger attributes, with no U.S. port receiving a score of weaker.

For more information, a special report titled 'Peer Review of U.S. Ports' is available on the Fitch Ratings web site at 'www.fitchratings.com'.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research: Peer Review of U.S. Ports (Attribute Assessments, Metrics, and Ratings)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=750407

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.



Fitch Ratings

Emma Griffith

Director

+1-212-908-9124

Fitch Ratings, Inc.

33 Whitehall St.

New York, NY 10004

or

Seth Lehman

Senior Director

+1-212-908-0755

or

Zane Latham

Associate Director

+1-415-732-5612

or

Charles Askew

Associate Director

+1-212-908-0644

or

Media Relations

Elizabeth Fogerty, +1-212-908-0526

elizabeth.fogerty@fitchratings.com


Source: Fitch Ratings


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