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CPA seeks bond rating
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Posted on Sep 02 1999
The Commonwealth Ports Authority will meet with two international rating agencies to have its $33 million seaport bond rated, according to Carlos H. Salas, CPA executive director.
Fitch IBCA and Standard and Poor’s earlier failed to give any rating to the seaport bond. But Fitch gave the $20 million airport bond a Triple BBB minus rating.
Salas said the rating will boost the credibility of the ports authority and the Commonwealth in the financial community as well as reduce the interest rate from the current 6.85 to 6.6 percent.
CPA hopes to get the seaport bond rating between now and March 2000.
A seaport study conducted by Booz, Allen and Hamilton revealed that the pullout of the garment industry in the Northern Marianas would cripple seaport operation since it is the main source of its revenues. Saipan Harbor is heavily dependent on the garment industry since it is the only significant export of the CNMI. In 1997, the garment industry’s total revenues topped $800 million.
While the CNMI currently enjoys huge revenues from the garment factories, the study noted that the long-term future of the industry, however, remains uncertain as a result of international trade agreements and potential legislation.
The study pointed out that Saipan has a very imbalance container trade, reflecting its position as primarily a consumer of goods while imports come from various sources. Exports are primarily transshipped via Guam to the U.S. at a significant premium.
The ports authority has already carried out a 30 percent increase in seaport rates, wharfage fee, port entry fee in July 1999. Although the seaport consultant Booze, Allen and Hamilton has advised that raising of seaport fees must begin in the year 2000, the ports authority decided to implement it much earlier to provide CPA with the needed funds.
A huge amount of $33 million bond float was used to complete the $43 million Saipan Harbor Improvement Project. Aside from having a 2,600 linear feet of berthing space and a 22-acre container yard, the harbor now is minus 40 ft. deep. In addition, the channel, turning basin and berthing area have been expanded to accommodate a large number and greater variety of vessels.
