Aug 27 (Reuters) - Moody’s Investors Service on Tuesday cut to A3 from A2 its credit ratings on seaport revenue bonds from Florida’s Miami-Dade County based on an increase in leverage and tighter financial margins.
Underwriters for the county on Monday postponed until September an offering of $389.3 million of seaport revenue bonds that had been expected to come to market this week.
Moody‘s, which said its outlook on the port debt was stable, said in a news release, “The downgrade of the port’s rating is based on the substantial increase in leverage, and the transformation of its debt profile and much tighter financial margins resulting from the current offering.”
Miami’s port is the world’s biggest cruise-ship venue and has other competitive advantages as a cargo facility but is planning to borrow through 2017 another $400 million for capital projects, Moody’s said.
“When looking at the total seaport debt picture, ... the port’s net revenues will not be sufficient to reimburse the county for the payment of debt service on its Capital Asset Acquisitions Bonds and Sunshine State Loans starting in 2017. At present, the port plans to pay for the expected shortfall out of cash,” Moody’s said.
Moody’s also said a decline in revenues and operating margins at the port could weigh on the A3 rating, as could a drop in the port’s direct debt service coverage ratios caused by possible future financings.