Finance: Canaveral, Cleveland

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Moody’s Investors Service has upgraded Canaveral Port Authority’s $30.2 million in outstanding revenue bonds to A2 from A3 and rated its financial outlook stable. The Cleveland-Cuyahoga County Port Authority’s board of directors has agreed to provide up to $161 million to support the combined refinancings of four previous economic development projects and to accept a federal homeland security grant.

Moody’s Upgrades Port Canaveral’s Bond Rating

Moody’s Investors Service has upgraded Canaveral Port Authority’s $30.2 million in outstanding revenue bonds to A2 from A3 and rated its financial outlook stable. The upgrade was attributed to low leverage, cruise growth, stable finances and pro-active capital plan management.

Port Canaveral’s five-year capital plan totals nearly $600 million, which will be financed with a combination of grants, matching funds, cash flow and unrestricted cash balances. The major current project is a new cruise terminal for Royal Caribbean, which is paying half of the $105 million total cost.

Moody’s viewed as a strength the port authority’s 35-year lease with GT USA, the U.S. subsidiary of privately-owned international cargo operator Gulftainer, to develop Canaveral’s container terminal. The agreement includes minimum guarantees and $100 million of investments in infrastructure, equipment and labor. The terminal begins operations at the end of this year.

"We continue to strengthen our financial profile by growing our cruise business with market leaders and partnering with global cargo operator Gulftainer as we enter into the container business," said Port Canaveral CEO John E. Walsh.

According to Chief Financial Officer Rodger Rees, "The guaranteed minimum throughput and Gulftainer’s significant capital investment help to minimize our risk as we diversify our revenue base."

At the end of 2013, Canaveral had $98.5 million in total outstanding port revenue bonds.

Cleveland Port Authority Board Approves Refinancings, Accepts Homeland Security Grant

At its monthly meeting on October 15, the Cleveland-Cuyahoga County Port Authority’s board of directors voted to provide up to $161 million to support the combined refinancings of four previous economic development projects, as well as approved the acceptance of a Homeland Security grant. Specifically, the board approved:

Issuing up to $5 million in lease revenue bonds in support of the Euclid facilities of Babcock & Wilcox Nuclear Operations Group, which is refinancing the outstanding balance of port bonds issued in 2004.

Issuing up to $16 million in tax-exempt senior housing bonds for Vista Prairie at Emerald Village, LLC, to refinance the outstanding balance of port bonds issued in 2006.

Issuing up to $110 million in tax-exempt development revenue bonds for Euclid Avenue.

Development Corporation to refinance the outstanding balance of Cuyahoga County and port bonds issued in 2005, 2008 and 2009 in support of Cleveland State University’s student housing.

Issuing up to $30 million in tax-exempt Cultural Facility Revenue and Refunding bonds for Playhouse Square Foundation to refinance outstanding balances of Port bonds issued in 2004 and other development related obligations.

Accepting $99,000 grant award from the Department of Homeland Security and FEMA for security improvements.

As the only local government agency whose sole mission is to spur job creation and economic vitality in Cuyahoga County, Port Authority President Will Friedman said a component of the port’s mission is to finance development through the sale of project revenue bonds to private investors.

"Today’s actions demonstrate the diversity of the port’s financing programs through its continued support to a variety of different, but critical organizations to the region," Mr. Friedman said. "The port is proud to help lower the cost of capital for a large manufacturing employer in Euclid, a senior housing development in North Olmsted, a public university in the heart of downtown, and one of the nation’s premier arts districts."