RATING DRIVERS
Supporting Factors:
- Strategically important entity to the Government of Jamaica (GOJ), the domestic maritime sector and the wider economy
- Favourable market position in containerised cargo in Latin America and the Caribbean supported by strategically located ports
- Privatization of some aspects of the commercial operations support expansion and modernization initiatives as well as operating efficiency
- Rebound in financial performance characterized by an uptick in profitability and adequate debt protection metrics albeit at reduced revenue levels
- Legislative framework supports revenue stability and growth
- Adequate governance structure and risk management practices
Constraining Factors:
- Uncertainties in the global environment may present downside risks to PAJ’s profitability
Rating Sensitivity Factors:
Factors that could individually or collectively, lead to an improvement in the ratings/outlook:
- An improvement in the credit rating of the sovereign over the next 12-15 months
- A significant increase in revenue leading to DSCR rising to 1.5 times for 2 consecutive years
Factors that could individually or collectively, lead to a lowering of the ratings/outlook:
- Unexpected material changes in the terms and conditions of its concession agreements with its cargo operators due to force majeure that will negatively impact the payment of guaranteed fixed revenue to the Authority
- A greater than 10% decline in operating revenue over the next 12-15 months.
COMPANY BACKGROUND
The Port Authority of Jamaica (PAJ or the Authority) is a statutory body that was established by the Port Authority Act of 1972. The Authority is the principal maritime agency of the Government of Jamaica (GOJ) with both regulatory and development responsibilities for Jamaica’s port and port facilities. PAJ reports directly to the Ministry of Economic Growth and Job Creation (MEGJC) and it is a critical agency of the GOJ in the achievement of its Vision 2030 National Development Goal of economic growth and job creation.
In its regulatory role, the Authority monitors and regulates the navigation of all vessels accessing Jamaica’s ports and harbours, including the setting of tariffs on all goods that pass through the public wharves. In addition, as the regulator for Jamaica’s ports and maritime facilities, PAJ provides and regulates compulsory pilotage and tugboat services, provides and maintains all navigational aids including beacons and lighthouses, maintains ship channels to ensure safe access to ports and harbours in Jamaica and serves as a tribunal for wharfage tariffs. The PAJ is also the designated authority with responsibility for ensuring that all of Jamaica’s ports comply with the International Maritime Organization’s (IMO) International Ship and Port Facility and Security (ISPS) code. In its development role, the Authority develops and facilitates investments in seaport and supporting infrastructure. The Authority’s development objectives are aligned with the medium-term strategic priorities of the GOJ. This includes the development of the Business Processing and Outsourcing (BPO) sector as a source of economic growth and job creation. In this regard, the PAJ provides around 1.6 million square feet (sq.ft.) of space for BPO operations across 3 locations: the Montego Bay Free Zone, The Kingston Free Zone[1] and the Jamaica International Free Zone.
Analytical Contacts:
Jeffrey James
E-mail: [email protected]
Anelia Oudit
Mobile: 1-868-487-8364
E-mail: aoudit@caricris.com
Website: www.caricris.com
Email: [email protected]
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