The international rating agency, Fitch Ratings, has upgraded the National Long-Term Rating of the Namibian Ports Authority (NamPort) to 'AAA' with a stable outlook. This action comes after the rating agency upgraded Namibia's National Rating on the South African scale to 'AAA' from 'AA-' with a stable outlook. Fitch has also upgraded Namibia's senior unsecured bonds rated on the national scale to 'AAA' from 'AA-.
According to Fitch, NamPort's ratings are equalised to those of the Namibian sovereign ratings, based on Fitch's assessment of its strong links with its sole shareholder, the government. The Namibian government unconditionally guarantees the punctual debt service of Namport's African Development Bank (AfDB) loan that represented more than 90% of Namport's debt at September 2019.
Factors that could, individually or collectively, lead to negative rating action/downgrade include a decline in government support or a negative rating action on Namibia's sovereign rating.
The complete span of best and worst-case scenario credit ratings for all rating categories range from 'AAA' to 'D'. These best and worst-case scenario credit ratings are based on historical performance.
"We view Namport's status, ownership and control as strong due to the 100% government ownership and broad operational and financial oversight by the sovereign. We view the government's support track record as very strong due to the historical financial contribution to NamPort's expansion plan as well as the government guarantee. We view the socio-political implications of default as strong as the port could continue to operate even after a financial or technical default. The financial implications of default would be strong, due in part to the guarantee," the latest Fitch rating reads. The Fitch assessment noted that NamPort remains a strategic asset for the Namibian economy as it operates the country's two ports at Walvis Bay and Luderitz and forms a critical part of the Namibian government's vision for the country's infrastructure development.
Fitch further noted that NamPort facilities serve as a secondary port of call for the southern African region, with some regional competition from the ports of Pointe Noire and Durban, though NamPort's facilities have competitive services, are efficient and linked to the hinterland.
"There is some cargo concentration in fuel and mining. Regional economic uncertainty has led to historical volatility in volumes," reads the Fitch report.
The Fitch report also points out that, historically, NamPort has maintained revenue growth through tariff increases.
While there is no specific regulatory mechanism to limit tariff increases or to recover Capex through tariff hikes, Fitch expects limited ability to modify tariffs above inflation due to constraints on customer affordability and regional competitive factors.
NamPort recently completed a new container terminal to give it an overall capacity of about 750 000 TEU by end-2019, giving the port significant excess capacity and new, modern facilities. The project was undertaken with significant government support including a guarantee of the debt funding the project and an additional equity contribution.