The next 12 months could bring about more rating changes for some U.S. ports after an unusually active year of rating movement for the sector, according to Fitch Ratings in its latest U.S. Ports Peer Review.
According to Senior Director Emma Griffith, there is potential for rating adjustments in the next review cycle due largely to factors idiosyncratic with select ports, though some broader market developments could play a factor as well. 'Trade policy and recent tariffs are areas that will no doubt have an impact on select U.S. ports in the coming months,' said Griffith. In fact, commodity exposure and tariff concerns were in part why Fitch kept its Rating Outlook for the Port of Alabama at Negative following its last rating review.
This comes following an active year of rating movement for U.S. ports over the last 12 months. As projected in its 2017 peer review, Fitch upgraded ratings for a handful of ports throughout the country over the last year. The performance upswing continues for Hawaii's port system, which Fitch upgraded to 'AA-' following an upward Outlook revision to Positive the year prior. Fitch also upgraded the North Carolina Ports Authority (to A-) reflecting robust financial performance and increased flexibility from state appropriation funds. The seaports in the Northern Mariana Islands were also upgraded (to BB) in the last year, following sustained financial performance in excess of Fitch's forecast expectations.
Conversely, Broward County's Port Everglades saw a reversal of sorts with Fitch revising its Rating Outlook back down to Stable after a move to Positive in 2016. 'Port Everglades is undertaking a significant capital plan that requires additional borrowing in excess of that initially anticipated, with some uncertainty remaining regarding the timing and final amount of the debt issuance,' said Director Stacey Mawson. Elsewhere, Fitch downgraded the Port of Houston's GO bonds to 'AA' from 'AAA', on parity with the Issuer Default Rating.
Fitch has also launched its 2018 update to the interactive peer study for standalone U.S. port credits, the Fitch Analytical Comparative Tool, or FACT concurrently with release of today's peer review.
FACT uses an interactive interface to easily review and compare key credit metrics that underpin Fitch's analysis of U.S. ports, allowing users to select subsets of Fitch's rated ports for comparison. The interactive FACT tool contains key financial information for Fitch-rated standalone port issuers in the U.S., graphical plotting function for annual and median performance and a radar chart that indicates key risk levels. The tool allows selection of medians by rating category as well as by market size. The database now includes six years of data, providing a more comprehensive base for historical trend analysis.
