Fitch Sinks Port Bonds

Fitch Ratings Tuesday downgraded $236 million of outstanding Alabama State Port Authority revenue bonds to BBB-plus from A-minus and said the outlook is stable.

“The downgrade reflects an elevated risk profile for the authority’s financial strength due to weak economic conditions and a doubling of long-term debt from approximately $173 million at fiscal year-end 2006 to $361 million at present,”  Fitch said in a release.

Near-term credit drivers include the need to refinance a $110 million outstanding bank loan prior to maturity in December 2010 and the assumption of a gradual recovery in shipping volumes from the low levels observed over the past year, Fitch said.

The port has incurred significant new debt over the past three years to finance a building program that increased general cargo, intermodal, and steel shipping capacity.

“Should the revenue benefits of these projects materialize as forecasted, the port authority’s risk profile could improve,” Fitch said.

The Port Authority’s primary function is to administer the Port of Mobile. As a self-supporting state agency, it is the owner and operator of facilities that account for close to two-thirds of the port’s volume.

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Transportation industry Alabama
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