In separate actions Tuesday, Fitch Ratings took a negative view of both the seaport and airport revenue bonds of the Northern Mariana Islands Commonwealth Ports Authority.
The Northern Mariana Islands is a U.S. commonwealth in the western Pacific Ocean 1,461 miles south of Tokyo and 5,690 miles west of San Francisco.
Some $16.5 million of airport revenue bonds that were placed on negative watch were already rated CCC, which means “default is a real possibility,” according to Fitch. The authority operates three airports, the largest at Saipan.
The airports’ deteriorating operating and financial profile reflects losses in the commonwealth’s tourism and garment industries, resulting in rate covenant violations and the use of unrestricted cash to make debt service payments in fiscal years 2006, 2007 and 2008, analysts said.
Should turnaround efforts fail to materialize, “the depletion of cash balances could very well occur within two to three years,” the rating agency said.
Fitch also downgraded the authority’s $34.3 million of seaport revenue bonds to BB-minus with a stable outlook from BBB-minus. The credit action reflects an approximately 40% decline in the ports’ operating revenues, driven by declines in the garment and tourism industries, analysts said.
