Lower volumes hurt VPA debt rating
Debt ratings agency Fitch Ratings has slightly downgraded its rating on the Virginia Port Authority in the wake of reduced container volume.
Fitch has moved its rating of VPA’s $217.4 million in outstanding revenue bonds from “A+” to “A”, but said its outlook for the port is stable. The bonds are backed by the authority’s net revenue, which has swooned in recent months, along with every other major port worldwide during a deep economic recession.
“The downgrade to ‘A’ reflects VPA’s weakened financial profile as a result of significant throughput declines in the authority’s container volumes during year-to-date fiscal 2009 as a result of a worsening global recession,” the ratings agency said. “The action also reflects the loss of customers and container volumes driven by increased competition from the new 2-million-TEU capacity terminal opened by A.P. Moller – Maersk in August 2007.”
Last year, VPA terminals handled 2.08 million TEUs, 2 percent less than in 2007. First quarter volume was 408,089 TEUs, off 20 percent from the same 2008 period.
But the VPA has recently announced three new services — two from the CKYH Alliance and one from China Shipping — that it said would result in more than 150 additional yearly ship calls at the port.
The CKYH calls begin this month and one, the NATCO-4 from Asia, will have Norfolk as a first inbound port of call. China Shipping will have its AAE-1 service return to Norfolk in mid-June after an absence of more than a year.