Fitch Ratings has published an updated version of its 'Rating Criteria for Ports'. The updated report replaces the existing criteria (published Oct. 20, 2015) without modifying Fitch's analytical approach. No changes to the ratings of existing transactions are anticipated as a result of the application of the updated rating criteria.
The report describes the analytical framework used by Fitch analysts when evaluating debt issued by maritime ports across the globe. It applies both to whole port enterprises and single/multi-terminal facilities with an operational history that may be under a variety of ownership models. The criteria report also applies to enterprises that own port facilities in multiple locations. The report includes debt borrowings with a broad revenue pledge (i.e. entire operating revenues from the port enterprise) as well as those with more limited revenue streams, such as facility leases. The report applies to both new ratings and surveillance of existing ratings.
The report highlights the following five key risk factors which typically determine the rating of debt issued by ports:
--Revenue Risk - Volume: Operational and facility attributes that drive the breadth and diversity of service, including economic underpinnings that support trade volumes;
--Revenue Risk - Price: Legal frameworks and operating models driving cash flow generation, including contractual and/or regulatory provisions between the port, its host jurisdiction, and its trading partners;
--Infrastructure Development/Renewal: Planning, management, and funding of infrastructure development/renewal;
--Debt Structure: Composition of financial instruments, security, additional leverage tests, distribution limits, liquidity position and financial triggers;
--Financial Profile: Evaluation of cash flow resilience to support timely debt payment, and financial and operating metrics on a historical and projected basis, including sensitivity analysis.
In addition to further development of these key rating factors, the report also provides supporting credit risk commentary on other risk aspects specific to ports.
The report should be read in conjunction with Fitch's report 'Rating Criteria for Infrastructure and Project Finance', published July 8, 2016, and expands on the current port rating methodology used by Fitch. Further, the port criteria may supplement other relevant Fitch criteria when rating financings secured substantially by ad-valorem taxes, general corporate financings not premised on asset-specific analyses, port-related real estate transactions, and structured/securitized financings.
Additional information is available on www.fitchratings.com
Rating Criteria for Infrastructure and Project Finance, July 8, 2016
Rating Criteria for Infrastructure and Project Finance (pub. 08 Jul 2016)
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