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CPA wants BB minus rating for seaport bond
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Posted on Feb 07 2000
The Commonwealth Ports Authority is hoping to obtain a BB minus investment rating for its seaport bond, which is better than the assessment received last year by the airport from Fitch IBCA, a San-Francisco-based bond rating company .
Executive Director Carlos H. Salas said the strong financial presentation made by the CPA delegation to two investment rating companies in San Francisco earlier this year is expected to pave the way for a better bond rating for the seaport.
According to Mr. Salas, the improvements in deplanement or arrival statistics and the steady volume of cargo traffic at the seaport, complimented by the agency’s strict cost-cutting measures, should work in favor of the Ports Authority.
A study made for CPA by Booz Allen & Hamilton disclosed that the agency’s seaport revenues are expected to grow from $4 million during the fiscal year 1999 to over $5.6 million in 2002 largely because of the development in the garment sector.
He added that plans have already been finalized to build up a reserve fund aimed at offsetting the possible adverse impacts of the impending garment manufacturing sector’s pullout.
The impending pullout of the garment manufacturing industry, an anticipated result of the agreement that created the World Trade Organization since the United States will have to phase out its garment quota system by 2005, may cause the collapse of CPA’s seaport revenues beginning 2002.
Seaport revenues are projected to fall from $5.7 million in FY 2002 to $3.2 million in FY 2007 practically because 58 percent of the container movement activities in Northern Marianas harbor is buoyed by the garment industry.
CPA is working at making an initial $2.7 million deposit to the Seaport Reserve Fund within the year. The agency hopes to deposit $700,000 to the Fund every year to reach the target $8 million in five years.
Ports authority officials failed to secure a rating for the CPA’s seaport division last year. It hopes to receive a BB minus rating for the seaport, better than the rating secured by the airport.
Once rated, CPA qualifies to get 20 basis points reduction in its bond interest rates, from 6.85 to 6.654, which translates to over $80,000 in total savings each year.
