Fitch Ratings affirmed its long-term “A” rating on the Jacksonville Port Authority's outstanding 2008 revenue bonds. The ratings agency said Jaxport’s rating outlook is “stable.”
Fitch said Jaxport benefits from a strategic location with good and improving intermodal connectivity and infrastructure and maintains strategic importance as the second largest U.S. port for vehicle imports and largest for vehicle exports. The number one container port in Florida, Jaxport is located in the highly cargo competitive Southeast and historically has been reliant on relatively volatile trade with Latin America and the Caribbean.
It said the port's increasingly diverse revenue base has benefited from the opening of the MOL/TraPac container terminal in early fiscal 2009. Long-term contracts and minimum annual guarantees through fiscal 2015 from a diverse group of tenants provide additional downside protection for revenues.
Jaxport's current $42 million capital plan, which Fitch called “modest,” is financed by grants, internal sources and residual bond proceeds. The port has received $50 million in state grant funding since the new governor took office in January 2011 and another $10 million in Transportation Investment Generating Economic Recovery (TIGER) III Federal grant funding, largely for renewal and replacement projects.
Fitch said deferral of expected capital spending for a second container terminal operated by Hanjin Shipping beyond the previously indicated 2015 time frame should relieve pressure on the port's financial and debt metrics in the medium term.
Fitch said Jaxport has seen growing revenues despite the unfavorable economic climate in recent years, leading to senior lien debt service coverage ratios that are more than two times on average and are expected to be stable in that range going forward. Although the port has low liquidity with approximately 148 days cash on hand and a high debt ratio leverage of 7.45:1 as of Sept. 30, Fitch said this is mitigated somewhat by its status as a landlord port with minimum annual guarantees in excess of senior debt service requirements through 2015. The port also benefits from intergovernmental transfers from the city of Jacksonville.