New York, December 11, 2012 --
Issue: Series 2013 Port Facilities Revenue Bonds; Rating: Baal; Sale Amount: $27,000,000; Expected Sale Date: 12-12-2012; Rating Description: Revenue: Government Enterprise
Moody's Investors Service has assigned a rating of Baa1 to the Series 2013 Port Facilities Revenue Bonds and affirmed the Baa1 rating on the New Orleans Port Board of Commissioners'$89 million of outstanding senior lien Port Facility Revenue Bonds. The outlook is revised to positive. The rating is based on the overall continued improvements in the port's financial performance over the past three years evidenced by continuing growth in container tonnage levels and volume of cruise passengers and improved debt service coverage (excluding insurance proceeds and debt forgiveness). The rating also incorporates the port's ample liquidity position which is beginning to revert back to the previous lower, but adequate liquidity levels maintained during less stressful conditions.
The positive outlook reflects Moody's expectation that the port will continue to experience stable and/or improved revenue growth over the next couple of years given the recently signed multi-year cargo lease agreements and current negotiation of a third cruise agreement which should help achieve the projected levels of debt service coverage ratios (DSCRs) given the lack of additional new debt issuances in the medium term.
What could change the rating - UP
Given the port's ongoing recovery, a period of continued sustained increases in cargo volumes and cruise activity, maintenance of DSCR at or above projected and concurrent strengthening of financial margins could put upward pressure on the rating.
What could change the rating - DOWN
Consistently lower than projected cargo and cruise revenue growth, which would negatively impact DSCRs in the medium term, or additional senior lien debt issuances would exert downward rating pressure.
* Cruise activity has surpassed pre-Katrina levels by 18% in FY 2012 with 956,000 passengers, aided by two medium-term agreements with major cruise lines and a third one currently in negotiations
* Comparatively low leverage and no plans for additional debt. The port will continue to pursue grants and private investment for most major projects, as well as debt forgiveness for the state's assistance program loan.
* The port has a strong market position on the Mississippi River with good intermodal connections and serves an important role in the gulf economy
* Recently executed multi-year cargo lease agreements with over 34% of operating revenues under minimum annual revenue guarantees ( MARGs) (47% of terminal related revenues under MARGs) over the next five years
* Improved total DSCRs of 2.03 times and 2.04 times over FY 2012 and FY 2011 respectively, with projected senior and total DSCRs averaging 2.63 times and 1.57 times respectively in the medium term.
* Strong unrestricted cash position, with $48.1 million (484 days cash on hand) at the end of FY2012
* Financial projections assume continued new revenue growth with senior DSCRs averaging 2.63 times, which is still below the pre-Katrina average of 3.72 times.
*Increased annual debt service or approximately $1.3 million as payments under the assistance loan program have begun in January 2012, and step-ups in senior lien debt service in 2014 and 2015. Increased payments are partially mitigated by the port's efforts to continue working on having the debt forgiven by the state and/or apply for equivalent grants, as well as interest savings from recent and current refunding
* Ongoing post-hurricane rehabilitation construction required over the next couple of years as port continues on its path towards financial improvement and stability
The principal methodology used in this rating was Moody's Rating Methodology for U.S. Ports published in February 2005. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.
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Jennifer Chang Analyst Public Finance Group Moody'sInvestors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653Chee Mee Hu MD - Project Finance Public Finance Group JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 Releasing Office: Moody's Investors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653(C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.
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