PRESS RELEASE: Moody's Affirms A2 Rating And Stable Outlook For Miami-Dade County's Seaport Revenue Bonds

The following is a press release from Moody's Investors Service: COUNTY HAS $58 MILLION SEAPORT REVENUE OUTSTANDING Miami-Dade (County of) FL Port Facility Ports Florida NEW YORK, June 21, 2010 -- Moody's affirms A2 rating for Miami-Dade County's seaport revenue bonds based on relatively stable operations and improving market share financial trends. LEGAL SECURITY: Net revenues of Port of Miami. INTEREST RATE DERIVATIVES: None. STRENGTHS *Strong competitive position as the world's largest passenger cruise port and cargo port serving the Americas (Central and South), the Caribbean, Europe and Asian markets *Large local market of 2.4 million people creates demand for imports *History of stable financial operations and strong senior debt service coverage CHALLENGES *Some activity declines due to economic recession, though less so than at other U.S. ports *Competition from neighboring seaports, particularly Port Everglades (rated A2), which directly competes for cruise passengers and cargo, though Miami has recently gained market share *Indirect exposure to construction risk for the new Port of Miami Tunnel RECENT DEVELOPMENTS The Port of Miami is a landlord port located on an island in the City of Miami (G.O. rated A2) that operates as an enterprise of Miami-Dade County (G.O. rated Aa2). The port continues to handle the largest number of multi-day cruise passengers in the world at over 4.1 million in FY 2009. The port's location near the Caribbean, access to several modes of transportation, and extensive and growing infrastructure help maintain market share. Despite the national economic recession cruise passengers declined only 0.7% in FY 2009 and levels are projected to remain relatively flat in FY 2010. Passenger levels increased by 9.3% in FY 2008 as cruise ship operators moved ships to Miami. Long-term terminal agreements with Carnival Cruise Lines (Senior Unsecured rated A3), Royal Caribbean Cruise Lines (Senior Unsecured rated Ba3), and Norwegian Cruise Lines, which include discounted rates and minimum annual guarantees, provide stability to cruise revenues, accounting for 40% of total operating revenues. Norwegian Cruise Lines will introduce this summer the line's largest F-3 class cruise vessel, the Epic. The Port also just finalized an amendment to the Carnival Cruise Lines Terminal Agreement guaranteeing a revenue stream of more than $181 million through its eight year term. Combined, the cruise lines long term agreements guarantee approximately 80% of forecasted passengers, thus ensuring revenue stability for the port. Advance bookings for the next 12 months are reportedly strong. A new 750 space parking facility to serve cruise passengers and generate increased annual parking revenues has been completed. Cargo volumes were more severely affected by the recession than cruise passengers, with cargo volumes down 8.1% and TEUs down a relatively modest 2.5%. In FY 2009 the port entered into two new long-term cargo terminal operator agreements (Seaboard and a joint venture of Maersk and CMA) that moved from Port Everglades, thus increasing the port's total minimum annual guarantees from $37 million to $60 million, or 64% of total operating revenues. Trade activity with the Americas and the Caribbean trading partners accounted for 48% of total cargo in FY 2009 and these markets are holding relatively steady. Far East and Pacific cargo account for 33% of the total. The port is budgeting flat or slight decreases in cargo volumes for 2010. Total port operating revenues grew 5.7% in FY 2009 due mostly to open ground rental revenues From the two new cargo agreements. However, expenditure growth outpaced revenue growth at 12% due to increases in utilities and general and administrative costs. Rising security costs have pressured the port's finances since 9/11; however due to revisions to the Port Facility Security Plan and adequate staffing to mitigate overtime costs, security costs have leveled off. FY 2009 senior lien debt service coverage (DSCR) was strong at over 4.57x but basically breakeven including GO seaport bonds and subordinate Sunshine State loans (backed by county's covenant to budget and appropriate non ad valorem revenue, but DS paid by from Port revenues). In FY 2008 the port funded $15 million of capital expenses with operating revenues, which depleted unrestricted cash. The port reimbursed itself in FY 2009 with from proceeds from the 2009 Capital Assets Acquisition Bonds backed by the county. The port's 2010-2016 capital improvement program (CIP) is significant at $659.8 million with $427.6 million to be debt financed; however, we note that none of the debt is expected to be secured on parity with the port's revenue bonds. The debt is expected to be issued through the issuance of Capital Assets Acquisition Bonds or other alternative financial program backed by the county's non ad valorem revenue or as general obligations of the county. The CIP contains $288 million for port facility improvements, including bulkheads; container yard improvements, including the acquisition of two post-Panamax gantry cranes and $228 million for dredging to a channel depth of 50 feet from the current 42 feet. The channel deepening will accommodate the largest post-Panamax ships expected to arrive on the East Coast starting in 2014 when the Panama Canal expansion is completed. The port does not expect any environmental issues to affect the dredging project given the lack of industrial activity industry in the area. The port faces a near-term challenge to serve current customers and grow revenues while the new Port of Miami Tunnel is being constructed. The tunnel will provide direct access to I-395 and I-95 and provide an alternate route to the Port Bridge, which now is the only connection to the mainland. This is expected to relieve traffic congestion in the Miami downtown area, improve safety and facilitate future development plans in and around downtown Miami. A private concessionaire is paying the majority of the construction costs (approximately $1.5 billion) and will operate the tunnel under a long-term lease with the Florida Department of Transportation (FDOT). BACKGROUND The Port of Miami serves approximately 20 shipping lines that call on more than 100 countries and 250 ports across the world, serving markets in Asia, the Americas (Central and South) the Caribbean, Europe, and the Middle East. The port has 9 gantry cranes and 7 passenger terminals. During FY 2009 the port handled more than 6.8 million tons of cargo and 807,000 TEUs. The Port's debt service coverage has remained sound, especially on senior lien bonds. The port uses a combination of seaport revenue bonds, seaport general obligation bonds, and Sunshine State Loans to finance its capital needs. The Port's net revenues must cover maximum annual debt service (MADS) on the revenue bonds by 1.25 times annually and on the GO bonds by 1.10 times annually. The port has historically met or exceeded both of these tests. To the extent that net revenues are insufficient to pay G.O. debt service, G.O. bonds are payable from the county's general obligation unlimited tax pledge. OUTLOOK: The stable outlook reflects our expectation that the port will maintain its competitive position in the region and that revenue bond debt will remain relatively steady. What could change the rating--UP Successful management of operating costs, significant growth in cargo volume and revenues that fully support all debt obligations could place positive pressure on the rating. What could change the rating--DOWN Declines in operating margins and debt service coverage and a significant loss of cruise and cargo operations to competing seaports would place downward pressure on the rating. KEY INDICATORS Type of Port: Landlord Cargo Tons, 2009: 6.83 million Cargo Tons, 2008: 7.43 million TEUs, 2009: 807,000 TEUs,2008: 828,000 Cruise Passengers, 2009: 4.11 million Cruise Passengers, 2008: 4.14 million Operating Ratio, FY 2009: 69% Coverage of Revenue Bonds, FY 2009: 4.57x Coverage of MADS (G.O. and Revenue Bonds), FY 2009: 1.35x RATED DEBT Seaport Revenue Bonds, Series 1995, $35.2 million, A2 Seaport Revenue Bonds, Series 1996, $22.8 million, A2 Miami-Dade Co. GO, $130.4 million, Aa2 Sunshine State Loans VRDO/LOC $332.7 million, Aa3 (all loan covenants apply to county not port; payable from non-ad valorem revenues) Capital Asset Bond (Miami-Dade Co.), $68.6 million CONTACT: Miriam N. Abreu, Chief Financial Officer (305) 347-4819 The last rating action with respect to the port revenue bonds was on June 1, 2006, when a municipal finance scale rating of A2 and stable outlook was assigned to the bonds. That rating was subsequently recalibrated to A2 on a global scale on May 10, 2010. The port's bond rating was assigned by evaluating factors believed to be relevant to the credit profile of the issuer such as i) the business risk and competitive position of the issuer versus others within its industry or sector, ii) the capital structure and financial risk of the issuer, iii) the projected performance of the issuer over the near to intermediate term, iv) the issuer's history of achieving consistent operating performance and meeting budget or financial plan goals, v) the nature of the dedicated revenue stream pledged to the bonds, vi) the debt service coverage provided by such revenue stream, vii) the legal structure that documents the revenue stream and the source of payment, and viii) and the issuer's management and governance structure related to payment. ANALYSTS: Maria Matesanz, Analyst, Public Finance Group, Moody's Investors Service (MORE TO FOLLOW) Dow Jones Newswires June 21, 2010 16:31 ET (20:31 GMT) Carnival