The Port of Brownsville ranks third among U.S. ports for “strong financial resilience” surveyed in a new report from Moody’s Investor Services. The ranking underscores the ongoing value of the port’s prudent financial stewardship in light of economic impacts from the worldwide COVID-19 pandemic.
Moody’s analysis evaluated American ports on a range of key factors surrounding financial responsibility. This includes the ability to handle the impact of a significant decline in cargo volume, financial liquidity and debt service coverage ratio. The analysis ranks the Port of Brownsville among the most stable in the nation.
“We take our financial obligations very seriously and work to ensure we are responsible stewards of the port’s resources,” said John Reed, chairman of the Brownsville Navigation District. “Even during today’s extraordinary economic climate, the Brownsville Navigation District Commission is taking responsible steps to maintain a stable financial foundation to attract continued growth and job creation.”
“Landlord” Advantage in Minimizing Risk
Moody’s report highlights the important advantages of a “landlord” business model versus the “operator” model. The port operates the landlord model, partnering with tenants primarily through stable long-term leases. With the operator model, authorities conduct daily operations directly for port customers. This can result in “high revenue volatility in periods of stress.” The report concludes that “the landlord model has historically proven to stabilize revenues.” This underscores the Port of Brownsville’s advantage in managing risk as the largest land-owning port in the United States. It has more than 40,000 acres and available resources for large-scale industrial developers.
“Healthy” Debt Service Coverage Ratio
The report also highlights the Port of Brownsville’s strong 5.0 Debt Service Coverage Ratio. It is more than double that of most other ports Moody’s analyzed and indicates “a strong position from which to absorb and manage revenue pressures.” DSCR is a standard measure of cash flow available to pay current debt obligations. Through such careful financial management, “ports’ debt service coverage and liquidity are key credit features that enable them to manage revenue disruptions and other extraordinary challenges in this period of unprecedented stress,” the report states.