The Virginia Port Authority expects to sell $65 million of bond anticipation notes on Tuesday as it grapples with slower shipping business amid the recession. The Bans are rated MIG-1 by Moody’s Investors Service and SP-1-plus by Standard & Poor’s.
Moody’s carries a negative outlook due to a substantial decrease in cargo shipments, which is expected to reduce debt service coverage levels. Shipments are expected to decline 18% in fiscal 2009.
The one-year Bans will refinance notes maturing on June 30 that were issued for yard construction and rail improvements at the Norfolk International Terminal.
The recession has reduced cargo shipments to the port and is projected to cut debt service coverage to 2.3 times in fiscal 2009 from 3.7 times in fiscal 2008, Moody’s said. Additionally, two shipping companies left for a competing facility, leaving behind a revenue hole.
In April, a Chicago-based real estate company made an unsolicited bid to operate the port. CenterPoint Properties offered the state $500 million upfront and $8.9 billion over 60 years. The state opened the bidding to other companies, which have until July 27 to submit bids.
Rodney Oliver, finance director for the authority, said he doesn’t expect additional private bids until closer to the deadline. Moody’s said it will continue to review the implications of a private takeover.
McGuireWoods LLP will serve as bond counsel for next week’s Ban deal. Morgan Stanley and Siebert Brandford Shank & Co. will serve as underwriters. Public Financial Management Inc. is financial adviser.