Fitch Ratings and Moody’s had recently updated the ratings of several port authorities in America.
Port Authority of New York and New Jersey’ (PANYNJ) was given an ‘A+’ rating on its 230th, 231st, and 232nd consolidated bonds. With regard to the obligations of PANYNJ, ‘A+’ was assigned on its outstanding parity consolidated notes and 1WTC-2021 liberty revenue refunding bonds, ‘A-‘ on its 4 World Trade Center project bonds series 2021A issued by the New York Liberty Development Corp. and payment obligations associated with 4 World Trade Center and Goethals Bridge, and ‘F1+’ on its authorized commercial paper program series A-C. In giving such ratings, Fitch Rating explained:
The ratings reflect PANYNJ’s mature, diverse and monopolistic transportation infrastructure asset base, which provides critical service to the strong New York City metro area, supported further by a conservative debt structure. The agency is still within a recovery phase of the COVID-19 pandemic where revenues from operations had been adversely impacted, resulting in tighter fiscal metrics and diminished net cashflow for capital spending.
While recovery in several transportation segments have been evident over the past year, and the agency has continued its effective cost containment actions, the medium-term infrastructure needs remains extensive in both scope and costs. In Fitch’s view, the extensive capital plan with potential for continued upward adjustments, constrains the rating. Downside risks consider a prolonged recovery phase, thus pressuring PANYNJ to utilize a greater level on borrowings than previously estimated to support its multi-year capital plan, inclusive of both senior and subordinate borrowings.
Port of Beaumont Navigation District, TX’ has been assigned an ‘AA-‘ rating on its outstanding revenue bonds. Fitch Rating explained:
The rating reflects the port’s steady operational performance and strong revenue structure benefiting from stable port operations and cargo mix. Furthermore, the port also has the ability to utilize its maximum general fund levy capacity for O&M expenses at a rate of $0.10 per $100 of the total assessed value (the current 2022 general fund tax rate is $0.0648), providing an enhanced cushion to the revenue structure and offsets to revenue bond debt service.
Lastly, Ports America Chesapeake, LLC has been assigned with ‘Baa2’ rating on its revenue bonds Series 2019 A and 2019 B and to the revenue bonds Series 2017 A and 2017 B. In assigning said rating, Moody’s reported:
The rating upgrade to Baa2 reflects PAC’s continued strong financial performance in 2021 and year-to-date 2022. Operating revenue in 2022 will likely continue to outperform initial expectations given the recent opening of Berth III, PAC’s second berth capable of handling super post-Panamax vessels, continued supply chain challenges as well as robust consumer demand in the US. PAC benefits from its position as the only dedicated container terminal at the Port of Baltimore under a long-term concession agreement.
Liquidity is adequate. At December 31, 2021 PAC had $25 million of unrestricted cash on balance sheet. PAC also has a 3-months O&M reserve backed by a letter of credit with recourse to Ports America Holdings, LLC. The 2019 Series A and B bonds benefit from a 6-months debt service reserve fund requirement but the 2017 bonds only have a 3-months debt service reserve fund requirement.