The outlook on Alabama State Port Authority's revenue bonds was raised to positive from stable by Fitch Ratings Friday.
The agency cited strong debt service coverage and modest leverage levels. Fitch affirmed the bonds' BBB-plus rating.
The outlook change affects $231 million in revenue bonds. The authority also has $55 million in series 2020 and series 2024 dock facilities revenue bonds, which Fitch doesn't rate, but is on parity with the rated debt.
Continued growth in cargo volumes and revenues and strong liquidity levels are positives, Fitch said. If these continue and the authority executes capital plans without meaningful escalation in leverage, Fitch said it would likely result in an upgrade.
In fiscal 2024 the authority's debt service coverage ratio without state resources was 3.1X and 3.6X with, which Fitch described as strong. Liquidity increased to 341 days cash on hand.
The authority has an elevated concentration of commodity cargo and a volatile revenue profile due to modest contractually obligated payments, Fitch said. Commodity cargo makes the port susceptible to fluctuations in cargo volumes and prices.
"However, growth in container operations and other business lines have resulted in an increasing share of revenues underpinned by fixed contractually obligated user payments," Fitch said.
The authority's five-year capital plan for 2026 to 2030 forecasts capital spending of $720 million. It plans to fund it mainly through grants, additional indebtedness and internal cash flow.
The authority primarily owns and operates the Port of
Concerns remain about how
S&P Global Ratings rates the bonds A-minus with a stable outlook.
