S&P affirms ‘A’ rating and stable outlook for Port Authority of Guam

By Pacific Island Times News Staff

S&P Global Ratings has affirmed its long-term ‘A’ rating on the Port Authority of Guam’s outstanding Series 2018 port revenue bonds and maintained a stable outlook.

“The stable outlook reflects our expectation that port activity will remain near current levels, allowing the port to continue producing key financial metrics in line with historical performance and appropriate for the current rating,” the S&P report said,

The rating agency noted that the port’s “virtual monopolistic position as the sole provider of maritime facilities and services in Guam,” coupled with the island’s strategic importance to the U.S. military, guaranteed relatively stable container volumes, thus contributing to its stable outlook.

“Concentrated customer base with about 39 percent of operating revenue and 47 percent of cargo volume attributed to Matson Navigation Inc., and significant volume related to U.S. military activity on the island,” the report states.

The port’s strengths counterbalanced its liabilities, such as the relatively high concentration of shipping carriers and its location in a region prone to severe weather events.

“The rating also reflects our expectation that the authority's debt service coverage (as per our calculations), debt burden, and liquidity will remain near historical levels,” the rating agency said.

“Early planning and decisive action, including a $3 million debt reduction strategy to maintain compliance with its rate covenant and helped maintain strong debt service coverage and overall fiscal stability,” it added.

The rating agency also complimented the port authority’s proposed tariff increases and additional debt plans for fiscal 2026.

“We believe the port’s proposed tariff increases—pending approval from Guam Public Utilities Commission—will help it maintain strong financial metrics and offset inflationary pressures, cargo volume declines, and increases in debt service related to planned issuance in fiscal 2026,” S&P said.

The port’s requested tariff increase represents its first since fiscal 2016, when the PUC approved phased-in increases over fiscal years 2017-2021.

In July 2025, the port submitted a tariff adjustment petition to the PUC, seeking tariff increases in two phases that would generate an additional $2 million

beginning second-quarter fiscal 2026, and about $4 million on an annualized basis.

Based on the fiscal 2026 budget, total operating revenue is expected to increase 18 percent versus fiscal 2025 estimates.

The port’s improved fiscal 2026 revenue forecast is supported by projected recovery in cargo driven by the overall recovery of Guam’s economy, the planned rate increases post-approval from PUC, and a new lease agreement with Black Construction Corp.

The port plans to issue up to $100 million of bonds during fiscal 2026 to fund capital projects.

“We expect the planned rate increase, new lease agreement and the overall rebound in activity levels will support port’s operating costs and financing of its capital expenditures, including debt service on additional debt needs,” the rating agency said.

The Port’s board of directors earlier passed a resolution authorizing the management to borrow up to $100 million from the bond market to leverage matching federal funds, if awarded, for critical modernization projects such as the purchase of new gantry cranes, and wharf and pier upgrades, among others.

“The borrowing is not intended to fully finance these projects but to provide the local match required to access significant federal grants. This underscores the need for continued federal support for the Port Readiness Plan,” the port said.

“These bond rating results don’t come easy, and we don’t take them lightly either,” said Port General Manager Rory J. Respicio. “They reflect disciplined leadership, strategic decisions, and a consistent focus on a team effort doing what’s right for the Port. Along the way, our record shows we’ve strengthened practices and corrected course when needed to protect the Port’s finances and operations.”

Jojo Guevarra, chief financial officer, said the port reports its financial status monthly to the board and the public to maintain strategic and accountability.

“That transparency, combined with a team that takes ownership, shows in how we close out the fiscal year. Good financial management is not luck. It is deliberate and produces results,” Guevarra said.

“Challenges come up, but strong outcomes come from clear leadership, sound decisions, and employees who give their best every day because they are empowered to do so,” he added.

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