Fitch Ratings has published an update of its ‘Rating Criteria for Ports’. The updated report replaces the existing criteria (published Oct. 3, 2013) without modifying Fitch’s analytical approach. No changes to the ratings of existing transactions are anticipated as a result of the application of the updated rating criteria.
The report describes the analytical framework used by Fitch analysts when evaluating debt issued by ports across the globe. It applies both to whole port enterprises and single/multi-terminal facilities with an operational history and under a variety of ownership models.
The criteria also apply to enterprises that own port facilities in multiple locations, each of which is an exclusive franchise, require intensive capital works, and are linked to a single territory or market. It is intended to include debt borrowings with a broad revenue pledge (i.e. entire operating revenues from the port enterprise) as well as those that have more limited revenue streams, such as facility leases.
The report highlights the following five key risk factors which typically determine the rating of debt issued by ports:
–Operational and facility attributes that drive the breadth and diversity of service, including economic underpinnings that support trade volumes;
–Legal frameworks and operating models driving cash flow generation, including contractual and/or regulatory provisions between the port, its host jurisdiction, and its trading partners;
–Planning management and funding of infrastructure development/renewal;
–Debt structure and composition;
–Relevant debt service, financial and operating metrics.
In addition to further development of these key rating factors, the report also provides supporting credit risk commentary on other risk aspects specific to ports.
The report should be read in conjunction with Fitch’s report ‘Rating Criteria for Infrastructure and Project Finance’, published July 12, 2012, and expands on the current port rating methodology used by Fitch. Further, the port criteria may supplement other relevant Fitch criteria when rating financings secured substantially by ad-valorem taxes, general corporate financings not premised on asset-specific analyses, port related real-estate transactions, and structured/securitized financings. The introduction of this criteria report is not anticipated to result in rating actions.