FITCH Ratings has upgraded its long-term rating on the Virginia Port Authority's (VPA) outstanding US$156 million in port facilities revenue and refunding bonds to "A+" from "A". The Rating Outlook is Stable.
The upgrade reflects improving metrics that highlight the Authority's focus on streamlining operations, and a plan which is focused on optimising facilities for capacity and operating efficiencies.
The "A+" rating reflects strong characteristics including a leading east coast market position in the container trade, with no capital spending needed to accommodate the new generation of larger container vessels.
VPA is well placed to benefit from bigger ships, with 42 per cent of VPA's Asia business in 2014 came via the Suez versus below 29 per cent three years ago, driven by Indian and south east Asian exports.
Intermodal links into the port are also excellent. Resilient volume performance in recent years coupled with improving financial metrics support the "A+" rating.
"The general volatility in the shipping trade remains a risk, as does the ability of market share to shift to other ports as various capacity enhancement projects at competing facilities come online in the coming years," said Fitch.
As the third largest Atlantic port with focus on containers, the VPA benefits from a diverse mix of customers, with no one customer representing more than 13.5 per cent market share by volume, said Fitch.
Export and import volumes are roughly equivalent. Exposure to the extremely competitive Atlantic port environment remains a concern. However, volumes have shown significant recovery since their trough in 2009, and the port's diversity of trading partners and balanced import/export exposure are viewed positively.
VPA also benefits from excellent intermodal connections, with Norfolk Southern's existing Heartland Corridor and the addition of CSX's upcoming National Gateway providing double-stack rail to the Midwest, the statement said.
VPA's long-term contracts with its largest customers account for 84 per cent of cargo volume. Minimum guarantees under current contracts equal to 40 per cent of 2014 operating revenues, providing a degree of revenue and throughput stability going forward.
VPA shows sound historic financial performance with demonstrated willingness on the part of management to control operating expenses in recent years, in the face of challenging economic conditions and increasing competition.
VPA has a diverse mix of customers, most with contracts extending 10 years or longer and accounting for 84 per cent of Virginia International Terminals (VIT) cargo volumes.
After seeing declining container volumes through the recession, VPA's operations have seen robust recovery. Volumes have grown at a compound annual average growth rate of 4.2 per cent since 2009, and fiscal 2014 saw an increase of 6.5 per cent to 2.3 million TEU.
Year to date through January (seven months of fiscal 2015), total box volume was up 8.4 per cent year on year.
PORTS
03 March 2015 - 21:11
Fitch upgrades Virginia Port Authority's port facilities revenue bonds to A+
FITCH Ratings has upgraded its long-term rating on the Virginia Port Authority's (VPA) outstanding US$156 million in port facilities revenue and refunding bonds to "A+" from "A". The Rating Outlook is Stable.
PORTS
03 March 2015 - 21:11
Fitch upgrades Virginia Port Authority's port facilities revenue bonds to A+
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