KEY RATING DRIVERS
Revenue Risk -Volume: Stronger
Very Strong Market Position:
Revenue Risk -Price: Stronger
Resilient Revenue Stream Despite Exposure to International Trade: With a large majority of operating revenues coming from the container business, the port is exposed to fluctuations in international trade as evidenced by shrinking trade volumes over the recent recession due to overall weakness in the global economy, fuel cost volatility and US Dollar values. Long-term guaranteed contracts with most tenants mitigate cargo volume risk. Over the next five years, the port estimates annual minimal lease revenues in the
Flexible Capital Program: The port's capital program is modestly sized at
Debt Structure: Stronger
Conservative Debt Structure: All of the port's outstanding bonds are fixed rate obligations with stable annual debt service requirements. Covenants and reserve requirements are in-line with highly rated U.S. port credits.
Debt Service & Counterparty
Strong Financial Profile: The port benefits from a strong balance sheet and high coverage ratios highlighted by preliminary FY2014 unrestricted reserves of
Negative - Operational Underperformance: Substantial changes in container tonnage or a marked shift in the diversity of revenue sources supporting the port;
Negative - Metrics and Leverage: A sustained reduction in debt service coverage ratios falling below the 2.0x range or divergence from current leverage levels due to changes in the port's cost structure and scope of capital plan.
PEERS: Amongst its peers in the 'AA' rating category, such as
The series 2014 bonds will be divided into three components: 2014 series A (AMT) to fund non-governmental projects and refund the outstanding series 2006D bonds, 2014 series B (Non-AMT) to refund outstanding commercial paper, and 2014 series C to fund new money governmental projects. All of the bonds are expected to be issued in fixed rate mode with an overall final maturity in 2045.
Following a period of trade volume contraction during the most recent recession, port activity has since shown signs of steady improvement. Container units (20-foot equivalent units or TEUs) rose to 8.2 million in fiscal 2014, which is 5.5% higher than the previous year. As considered in the
One long-term risk is the fact that discretionary cargo is a key component of
Historical financial performance at
The port maintains prudent financial practices including a target of minimum 2.0x coverage on its revenue bonds as well as maintaining a high level of minimum available reserves. Further, the port's updated financial exposure to
The port's capital improvement plan is moderate in nature at just under
All harbor department revenue bonds are secured by senior lien on revenues of the port.
Additional information is available at 'www.fitchratings.com'.
--'Rating Criteria for Ports' (
--'Rating Criteria for Infrastructure and Project Finance' (
Rating Criteria for Ports
Rating Criteria for Infrastructure and Project Finance
Saavan Gatfield, +1 212-908-0542
Source: Fitch Ratings
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