Standard and Poor’s Global (S&P Global) recently announced an upgrade to the Port of Galveston’s bond rating from a “BBB+” to an “A-“. The new investment grade rating has a stable outlook.
The upgrade reflects the application of S&P Global Ratings' updated rating criteria which was published in March 2018.
“Upgrading the Port’s bond rating has been a goal of mine since arriving here at the Port of Galveston. This new rating confirms the Port’s financial stability and growth potential. The upgrade allows the Port to lower its borrowing costs as we seek financing for our much-needed infrastructure improvements,” said, CEO Rodger Rees.
According to the report, the strong enterprise risk profile reflects the port's adequate market position due to its niche position as a major port of call for cruise operations, extremely strong service area economy, low industry risk relative to that of other sectors, and strong management and governance. Additionally, a very strong debt and liabilities capacity due to the system’s low debt burden contributed to “A-” upgrade.
"The rating reflects our opinion of strong enterprise risk and financial risk profiles,” said S&P Global Ratings credit analyst Ken Biddison.
The stable outlook reflects S&P’s assessment of the Port's improved operations and resultant financial margins, which is expected to continue near current levels over the two-year outlook period.
If the debt service coverage materially improves, S&P could raise the Port’s rating in the next two years.
About the Port of Galveston
The Port of Galveston is the region’s gateway to the Gulf for cruise ships and international trade. Located at the entrance to Galveston Bay, the Port leases and maintains facilities on both Galveston Island and Pelican Island. The Galveston Island operations are a diversified mix of cargo including Roll-on Roll-off cargo, dry bulk, export grain, refrigerated fruit, general cargo, and project cargo. In addition, the Port handles over 1.8 million cruise passenger movements annually. The Port’s Pelican Island facilities comprise a combination of undeveloped property, an active ship and rig repair facility, and liquid bulk operations. The Port is a self-supporting enterprise utility with operating revenues of approximately $38 million. It does not rely on tax dollars for operations.