"With up to 65 per cent of cargo destined for inland markets, competition for this cargo may increase as ports on both the east and west coasts compete for discretionary cargo volumes," said Fitch.
"Under various scenarios that contemplate drops in cargo volumes, funding of the full capital plan with an additional $1 billion of debt obligations per management's projections and careful management of operating and capital expenditures," said Fitch.
"Should volume stagnate or should the port fail to manage its expense profile prudently, the port may need to delay or defer certain elements of the capital programme in order to maintain these coverage levels," said the agency.
New York and London-based Fitch, the No 3 ratings agency behind Moody's and Standard and Poors, made the statement while granting the Port of Long Beach a double A rating - one down from a top rated triple A - on its new US$172.5 million bond issue.
"Over the five-year forecast period this represents average annual revenue growth of two per cent, coupled with expense growth of 4.9 per cent," said Fitch, reported the American Journal of Commerce.
Fitch has also affirmed the ??AA' rating on $822.7 million in outstanding senior lien harbour revenue bonds and notes, and the ??AA-' rating on the outstanding, but yet to be issued, $325 million subordinate TIFIA loan. The rating outlook on all bonds is "Stable".
AAA means reliable and stable, AA means- quality with a bit higher risk, A means economic situation could affect finance, BBB means an acceptable risk, BB means more prone to economic changes, CCC means vulnerable, D means defaulted before, high risk.
With 76 per cent of operating revenues from containers, the port is exposed to fluctuations in international trade and growing competitive pressures, which can lead to volume volatility.
This has been especially true in 2016 and 2017 with the bankruptcy of Hanjin and the realignment of container shippers into new alliances resulting in volume fluctuations for Port of Long Beach and other ports worldwide, Fitch said.
But port revenues have proven to be "largely insulated from trade-related revenue volatility due to the high percentage of long-term guaranteed contracts in place with most tenants".
Fitch said ratings reflect the port's strong market position, with resilient revenues from long-term contractual guarantees that are sufficient to cover the port's debt obligations.
Fitch noted that agreements have been honoured even through the Hanjin bankruptcy. Minimum guarantees accounted for 87 per cent of operating revenues in fiscal 2016, and this share is likely to increase in the medium term as higher guarantees come online in connection with the completion of the Middle Harbour Redevelopment.
"Under various scenarios that contemplate drops in cargo volumes, funding of the full capital plan with an additional $1 billion of debt obligations per management's projections and careful management of operating and capital expenditures," said Fitch.
"Should volume stagnate or should the port fail to manage its expense profile prudently, the port may need to delay or defer certain elements of the capital programme in order to maintain these coverage levels," said the agency.
New York and London-based Fitch, the No 3 ratings agency behind Moody's and Standard and Poors, made the statement while granting the Port of Long Beach a double A rating - one down from a top rated triple A - on its new US$172.5 million bond issue.
"Over the five-year forecast period this represents average annual revenue growth of two per cent, coupled with expense growth of 4.9 per cent," said Fitch, reported the American Journal of Commerce.
Fitch has also affirmed the ??AA' rating on $822.7 million in outstanding senior lien harbour revenue bonds and notes, and the ??AA-' rating on the outstanding, but yet to be issued, $325 million subordinate TIFIA loan. The rating outlook on all bonds is "Stable".
AAA means reliable and stable, AA means- quality with a bit higher risk, A means economic situation could affect finance, BBB means an acceptable risk, BB means more prone to economic changes, CCC means vulnerable, D means defaulted before, high risk.
With 76 per cent of operating revenues from containers, the port is exposed to fluctuations in international trade and growing competitive pressures, which can lead to volume volatility.
This has been especially true in 2016 and 2017 with the bankruptcy of Hanjin and the realignment of container shippers into new alliances resulting in volume fluctuations for Port of Long Beach and other ports worldwide, Fitch said.
But port revenues have proven to be "largely insulated from trade-related revenue volatility due to the high percentage of long-term guaranteed contracts in place with most tenants".
Fitch said ratings reflect the port's strong market position, with resilient revenues from long-term contractual guarantees that are sufficient to cover the port's debt obligations.
Fitch noted that agreements have been honoured even through the Hanjin bankruptcy. Minimum guarantees accounted for 87 per cent of operating revenues in fiscal 2016, and this share is likely to increase in the medium term as higher guarantees come online in connection with the completion of the Middle Harbour Redevelopment.