Office of Citizen
Rest in Peace,
Port Authority bond rating deteriorates ...
Submitted by Jeff Buster on Wed, 08/19/2009 - 19:26.
Here's the good news, because if the Port Authority is crippled, NEO will be more able to advance. Sorry, Adam. Thanks to ML for bringing this to my attention.
Fitch lowers Cleveland port authority's credit rating to BBB-
by tbrecken [at] plaind [dot] com/Plain Dealer Reporter
Wednesday August 19, 2009, 4:29 PM
CLEVELAND, Ohio -- Cleveland's port is studying ways to bolster its bond fund program, after a downgrade of its credit rating to worrisome levels.
Fitch Ratings this week lowered the Cleveland-Cuyahoga County Port Authority's credit rating from BBB+ to BBB-, one notch above junk status.
The lower rating means higher interest rates for debt issued by the port, including $3 million in bonds the port expects to float to help buy land in Beachwood for the Eaton Corp.'s headquarters.
The bad credit news "doesn't mean the end of the bond fund program as we know it," said Brent Leslie, the port's chief financial officer. "It will put us on a path to make it stronger."
The port's development fund has $77.9 million in bonds outstanding, Fitch said. The fund's relatively small size, with 22 borrowers, and its exposure to the struggling manufacturing sector were among factors in the ratings downgrade, Fitch said.
"There's limited diversification in the [bond fund] pool," said Fitch analyst David Litvack in New York. "It's not as diverse as a nationwide fund. The borrowing is concentrated in the Cleveland area. . . . There's more potential for systemic risk within the portfolio."
Fitch also issued a "negative" outlook for the bond fund program, meaning it could be downgraded again.
The specter of junk status has the port examining ways to boost the bond fund reserves, which total about $23 million.
Options include plowing more port authority money into the reserve, enhancing a letter of credit that backs it or asking state or local governments for financial support, officials said.
Leslie said he's also discussing solutions with Ohio port authorities facing similar trouble. Fitch downgraded the Toledo-Lucas County Port Authority bond fund program to BBB- in March.
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