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 ‘Peer Review of U.S. Ports’.
“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 mid-range 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 mid-range 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 mid-range 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.
Mid-range 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 mid-range and stronger attributes, with no U.S. port receiving a score of weaker.
Press Release; June 26, 2014; Image: bogota.gov