Fitch Ratings has revised the outlook on Miami-Dade County, Florida’s A-rated senior lien seaport revenue bonds issued for PortMiami to stable from negative.
Thursday’s action affects $800.3 million of Series 2021A-1, 2021A-2, and 2021A-3 senior lien seaport revenue bonds the county issued on behalf of its seaport department.
Fitch said the outlook revision “reflects the port’s increased operating stability highlighted by the full resumption of cruise activity as well as continued robust revenue performance from cargo operations, which together with the demonstrated prudent financial and debt management through pandemic-related disruptions, should enable PortMiami to maintain stable metrics under Fitch’s rating case.”
PortMiami
It said the ratings reflect PortMiami’s fundamental operating strengths, including its global leading cruise port market position and its role as one of the largest ports in the state of Florida in terms of cargo volume.
“The rating is further supported by the port’s substantial, long-term contractual minimum annual guarantees with both cruise and cargo operators, which have historically helped to insulate port revenues from volume and passenger volatility,” Fitch said. “PortMiami’s unrestricted funds remain substantial, providing sufficient liquidity to cover debt service payments and support operations in the near term.”
Fitch said the port is expected to maintain credit metrics in line with the A category despite a substantial capital plan that calls for sizable borrowings in the near term.
The port’s current capital improvement program running through fiscal 2033 totals about $1.1 billion. Major ongoing projects include cargo yard improvements and the construction of additional cruise terminals.
Fitch expects funding to come from future borrowing, grants, customer investment and existing funds.
“PortMiami anticipates additional capital investments given strong demand from cruise lines. Incurrence of significant debt in support of these projects may negatively affect the credit profile,” Fitch said. “However, projects can be reviewed and resized as needed, and management notes that not all projects are currently contractually obligated. Additional debt issuance will be contingent upon new contracts and consequent growth in MAGs.”
The $1.24 billion Miami-Dade County offering of seaport revenue refunding bonds for PortMiami was the winner of The Bond Buyer’s Deal Of The Year Award in 2021. The financing was the largest port transaction to come to market in the country since the start of the COVID-19 pandemic and the high demand for the bonds highlighted investor confidence in the seaport sector.
“The port derives operational benefits from previous and continued capital investments which have increased cargo capacity and cargo flow efficiency,” Fitch said.
Excluding the COVID-19 impact on fiscal 2020, cargo volumes and cruise passengers have grown positively over the last 10 years and are now resuming growth trajectories post-pandemic.
“Operations retain exposure to fluctuations in the cruise business and to the competitive port environment in South Florida and the U.S. Southeast,” Fitch added.
Fitch also rates about $442.5 million of the seaport’s Series 2021B revenue bonds, backstopped by a county covenant to replenish deficiencies in the debt service reserve fund, AA-minus with a stable outlook.