The Port of Palm Beach’s long-term contract renewals with its two largest tenants have helped boost its investment grade outlook to positive from stable, Moody’s Investors Service said last week.
New York-based Moody’s said the positive outlook reflects its view that the port’s extension of its contracts with its largest customers, Tropical Shipping and Bahamas Paradise Cruise Line, provides a higher level of revenue predictability.
Moody’s affirmed the port’s Baa3 investment rating and noted the port has experienced sustained financial improvement.
“One thing to note that is important is that Baa is an investment grade; people that invest in bonds need investment grade bonds which the Port falls into,” said Blair Ciklin, Chairman of the Board of Commissioners for the Port of Palm Beach District. “Baa3 is a very good rating for a port. It’s very satisfying to know that the Port of Palm Beach has an investment grade rating which is very important.”
In April the port commission unanimously approved a 10-year comprehensive agreement with Tropical with four five-year renewal options.
Tropical Shipping, founded in 1963, is the port’s largest tenant and makes up about a third of its revenues. Tropical’s main business is shipping food, especially perishable, refrigerated and frozen foods, groceries and consumer goods in containers from Canada and South Florida to The Bahamas and the Caribbean.
In August the port commission unanimously approved a 10-year agreement with Bahamas Paradise Cruise Line for the Grand Celebration passenger ship and a second cruise ship scheduled to start up in April, the NeoClassica.
Moody’s said the contract renewals extend through the maturity of the port’s $24 million in outstanding debt.
The Port’s credit strengths include a notable improvement in financial margins over the last five fiscal years, strong liquidity of approximately 820 days of cash on hand at the end of fiscal year 2016, and low leverage which provides financial flexibility and capacity for future capital investment.
Located in Riviera Beach, the 162-acre Port of Palm Beach is a full-service, diversified port, offering cruise and cargo services to more than 30 onsite tenants and users. It processes more than $7 billion in commodities such as sugar and molasses produced in Palm Beach County, 2.5 million tons of cargo and 500,000 cruise passengers annually.