Norfolk – Fitch Ratings, a leading international bond rating agency, this week gave it's A, "stable" rating to $159 million in outstanding Virginia Port Authority (VPA) facilities revenue and refunding bonds and in doing so affirmed the health of those bonds.
Earlier this year, Fitch undertook its annual surveillance audit of the bonds. In that audit, the ratings agency considers many different factors in determining the health of the bonds including long-term contracts, growth forecast, long-term capital plan and associated costs, debt structure, the financial backing of the bonds and an extensive credit review.
"The Port of Virginia is well-balanced among both trade lanes and shippers. The authority has a diverse mix of customers, most with contracts extending 10 years or longer," the Fitch summary said. "VPA has the water depth, capacity and on-dock rail to handle any size container vessel. Currently, there are three scheduled services utilizing the Port of Virginia as a 'first in' port of call, and six scheduled services with a 'last out' call.
"The Port of Virginia is well positioned to respond to the impacts of the P3 alliance, with all three participating carriers (Maersk, CMA, and MSC) calling at APM Terminal. While the port may see some competition for calls at other East Coast ports due to the alliance, management feels that Norfolk's deep water and the established presence of all three carriers will help to offset potential negative effects."
John F. Reinhart, the VPA's CEO and executive director, said he was pleased with the thorough, positive review of the port's bonds. The focus going forward, he said, is to maintain the health of the outstanding bonds and build upon it while better controlling operational costs, improving systems of cargo conveyance on the terminals, creating efficiencies and delivering a high-level of customer service.
"Our bonds are sound and it is clear that Fitch has a lot of confidence in the future of The Port of Virginia," Reinhart said. "We still have a lot of work to do to better align that long-term bond health with that of our annual revenues. As we continue to improve upon controlling our day-to-day operational costs, there will be a growing, positive reflection on several important issues like bond health. The end result is an improved ability to invest in the future of this port."