BRADENTON, Fla. - The Virginia Port Authority's credit ratings have been downgraded by S&P Global Ratings ahead of a planned bond sale to restructure the authority's debt.
S&P lowered its ratings to A from A-plus on the port's existing debt, issued under a 1997 bond resolution.
S&P also assigned an A-minus to VPA's upcoming sale of $296 million of subordinate refunding bonds, which will be issued under a new bond resolution.
The outlook is stable.
"The lowered rating reflects the increased ascending payment schedule associated with the senior lease payments and subordinate bonds, and the low aggregate near-term debt service coverage," said analyst Todd Spence.
Net revenues of the port will secure the 2016 bonds, which are subordinate to senior obligations that will include lease and construction payments the authority will make to Virginia International Gateway, the private owners of the marine terminal.
The lease provides for escalating payments estimated at $43 million in fiscal 2017 and rising to $228 million in 2065, S&P said.
With debt service on 2016 bonds included, the port's lease and debt payments are estimated at $63 million in fiscal 2017, and will rise to $243 million fiscal 2065.
Based on the financial forecast of all obligations, S&P said debt service coverage levels from 2017 to 2026 would range from 1.19 times to 1.94 times.
Coverage levels range from 1.34 times to 2.06 times when historical state revenues supporting VPA are factored in.
"The low levels, combined with the ascending payment structure, increase risk," Spence said. "If the authority has lower revenues or higher expenses than forecast, and is not able to make adjustments to meet the low minimum coverage levels in the early years, we could lower the rating."
VPA's upcoming sale is expected to be structured as $209.8 million of taxable port facilities refunding bonds and $86.2 million of refunding bonds subject to the alternative minimum tax.
Bond proceeds and available revenues will refund and defease the port's 2010, 2015A, and 2015 debt issued under the 1997 bond resolution.
Moody's Investors Service has assigned A1 ratings to the bonds.
The Virginia Port Authority did not immediately respond to requests for comment.
