Credit ratings agency Moody’s Investor Services downgraded Port of Miami debt ahead of the sale of nearly $400 million in bonds to improve its cargo facilities in conjunction with the expansion of the Panama Canal.
The deal, rated A3 by Moody’s, came with a final yield of 5.58 percent on a 2042 maturity carrying a 5.50 percent couple, Reuters reported, citing a pricing schedule from underwriters led by Raymond James & Associates.
The $383.6 million in revenue bonds sold at a spread of more than 40 basis points above similar credits, Reuters said. The port, better known for its cruise-ship traffic, is dredging its channel to make room for larger cargo vessels in time for the Panama Canal’s expected completion in 2015.
The expansion in Panama will allow much larger cargo ships to use the Central America passage and is widely expected to draw Asian ships to East Coast ports that now drop loads at West Coast facilities, Reuters said.
Owned by Miami-Dade County, the Port of Miami handles 1,600 cargo vessels a year and is spending nearly $1 billion on capital improvements through 2018.
Moody’s says the port may have to dip into reserves by 2017, as expected revenues will not cover expenses. [Reuters] – Emily Schmall