Moody’s cut the credit rating for PortMiami as the Miami-Dade agency prepared to borrow $205 million to pay part of the county’s obligation for the new port tunnel.
The downgrade to Baa1 keeps the port’s debt rating at investment grade, though the designation shifts PortMiami debt from having “low credit risk” to “moderate credit risk.” Thursday’s announcement comes as David Beckham is pushing to put a soccer stadium at PortMiami, and critics cite the port’s strained finances as evidence Miami-Dade can’t afford to risk disrupting the lucrative cargo or cruise operations.
In April Miami-Dade commissioners voted to let PortMiami pledge tax revenue as a back-up against port revenue as it sells about $220 million worth of bonds on Wall Street, mainly to pay $180 million toward a new underwater tunnel set to open later this month. Moody’s said to expect another $220 million in port debt by 2018.
The credit-rating agency assigned a stable outlook to the port, suggesting more downgrades aren’t expected. A lower credit rating typically makes it more expensive to borrow money, since bond holders will require a higher interest rate. The downgrade affects $695 million worth of port debt, Moody’s said. In 2013, Moody’s
In justifying the downgrade, Moody’s cited a “substantial increase in port leverage” to complete the tunnel and imrpovements tied to larger Panama Canal ships, and a reliance on PortMiami attracting more business in the coming years.