Bond ratings out soon

The Commonwealth Ports Authority may get the results of an evaluation of the two bond rating agencies — Fitch IBCA and Standard & Poor’s — early this month, said Carlos H. Salas, executive director.

Almost one year after the CPA carried out a $53 million bond flotation, the ports authority hired the services of the two agencies to get the bonds rated. He said the ports authority is expecting to get a Triple B rating at the most which will help maintain the current interest rate of 6.25 for the airport bond and 6.40 for the seaport bond.

According to Salas, the bond rating will boost investor’s confidence since it will prove that the ports authority has the capability to meet debt service and pay for its obligations.

CPA officials led by Salas met with representatives of the bond rating agencies last month where they held a presentation on the financial capability of the ports authority to repay its debt.

During the meeting, CPA was advised by the rating agencies to fix its financial problems after learning that it’s revenue has substantially declined due to Asia’s financial problems.

Two studies conducted on the seaport and the airport recommended the increase in fees so that the ports authority can pay for its obligations. Since the effects of Asia’s financial crisis will still be felt on the island until the year 2000, the airport study sought the immediate raise in landing fees this year by 68 percent.

At the seaport, the study recommended a 30 percent increase to take place in the year 2000-2002 and an additional five percent every five years.

With the declining revenue, the ports authority will target a 15 percent reduction in salaries and benefits for fiscal year 2000 and an additional 15 percent in 2001.

Since last year, Salas has carried out various cost-cutting measures such as elimination of overtime hours, freeze in salary increases, hiring and reduced operation hours.

At the same time, off-island trips for meetings, technical workshops and seminars will be granted on a case-by-case basis while trips for conferences and exhibitions will no longer be allowed.

In addition, leases of capital items such as computer, uniforms, supplies, furniture or vehicles will only be allowed if justified.