Rating Action: Moody's affirms Miami-Dade (County of) FL Port Facility's A3 rating, outlook negativeGlobal Credit Research - 26 Apr 2021New York, April 26, 2021 -- Moody's Investors Service, ("Moody's") has affirmed the A3 rating assigned to Miami-Dade (County of) FL Port Facility's ("PortMiami") senior seaport revenue bonds. The rating outlook remains negative.RATINGS RATIONALEThe affirmation of PortMiami's A3 rating reflects Moody's view that prospects for a restart of cruise operations at the port at some point in calendar year 2021 are increasing with a growing number of vaccinated people in the US. Moody's also considers management's demonstrated ability to manage through more than 12 months of suspended cruise operations at the port through operating expense reductions and with an adequate liquidity profile.Most major cruise line customers have declared force majeure and monthly cruise revenue will be negligible until cruise operations resume. Cargo operations provide some cushion but make up only 25% of total revenue in a normal year.The affirmation also reflects the long term value proposition of a cruise vacation which includes a group of loyal cruise customers that supports a base level of demand once health safety concerns have been effectively addressed. The rating affirmation acknowledges the importance of the cruise industry to the county of Miami-Dade and to the Florida economy as demonstrated by recent action by the Florida governor to support the industry. In that regard, Florida's governor has proposed to use $258 million of stimulus money to support Florida ports of which Port Canaveral and PortMiami would likely receive a substantial amount to support debt service and liquidity in fiscal 2021. Uncertainty remains when any stimulus will be approved by the Florida legislature.Fiscal 2021 will likely be the first year without a material number of cruise passengers. The lack of cruise operations will pressure financial metrics and its liquidity profile more than in fiscal 2020 that still benefited from a record first five months of cruising.PortMiami has maintained a fairly stable liquidity profile in fiscal year 2020 with around $101.1 million of unrestricted cash on balance sheet thanks to initiated expenditure reductions and the issuance of additional county-supported debt.Total senior revenue and GO debt service in fiscal year 2021 (ending September 30, 2021) amounts to $43.1 million, debt service on county-supported debt to around $30.7 million.Moody's expects that PortMiami will be able to fund any cash burn from operations and debt service even without any cruise revenue from its existing liquidity in fiscal year 2021. Moody's projects a return to material positive earnings in fiscal year 2022 and senior DSCR should slowly recovery to historical levels of 2.0x DSCR by fiscal 2023. However, total DSCR including county-supported debt may hover around or slightly below 1.0x through 2023.In the short run PortMiami's credit profile will be dominated by the length of time that cruise operations remain suspended. The path forward to resuming cruise operations remains unclear with the CDC conditional sail order until November 1, 2021.RATING OUTLOOKThe negative outlook reflects the uncertainty around the return of cruise operations in the US and continued severe pressure on financial metrics and liquidity in fiscal year 2021 with no cruise revenue.FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS- Improved financial performance supporting a return to senior DSCR (Moody's net revenue calculation) of around 2.0x- Total DSCR (direct and indirect debt) comfortably above 1.5x- Sustained improvements in the port's liquidity profile with days cash on hand materially above 450 days and cash to debt above 15% for a sustained period of time- Visibility that leverage will not increase furtherFACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS- Direct senior DSCR (existing GO and senior revenue bonds) below 2.0x, senior and subordinated DSCR below 1.3x- Total direct and indirect DSCR (including debt issued and backed by the county) falls to 1.0x- Weakening competitive position resulting in lower than expected operating revenue or loss of minimum annual revenue guarantee contracts- Weakening liquidity profile with days cash on hand falling significantly below 365 days cash on hand for a sustained period of timeLEGAL SECURITYThe port's outstanding debt of around $1.7 billion consists of a combination of seaport revenue bonds, seaport GO bonds, Sunshine State Loans, Capital Asset Obligation Acquisition bonds, and commercial paper notes. Senior debt (revenue bonds and GO bonds) amounts to around $0.6 billion.The seaport revenue bonds are payable solely from the revenue of the seaport and are not general obligations of the County. The general obligation (GO) bonds are payable primarily from the revenue of the seaport, and, to the extent that the revenue of the seaport is insufficient, are payable from ad valorem taxes levied on property in Miami-Dade County without limit as to rate or amount. Debt service on GO bonds ranks pari passu to revenue bonds.Sunshine State loans and capital asset special obligation acquisition bonds are not legal debt of the port, but the port has historically reimbursed the county for debt service paid from available seaport revenues. Both Sunshine State loans and capital asset special obligation acquisition bonds are subordinated to the seaport revenue bonds and the seaport GO bonds. The Miami-Dade (County of) FL, Seaport Commercial Paper Notes, Series A-1 (AMT) and Series A-2 (Taxable) (rated P-1, based on letter of credit from Bank of America, N.A.) are also subordinated to the seaport revenue bonds and GO bonds and are backed by the County.PROFILEPortMiami is a landlord port located in Biscayne Bay, on an island a half-mile from the City of Miami. The port is the largest multi-day homeport for cruise vessels in the world and benefits from sizeable cargo operations. The port is operated as an enterprise of Miami-Dade County, and has benefited from the county's implicit and direct support.METHODOLOGYThe principal methodology used in these ratings was Publicly Managed Ports Methodology published in June 2019 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1161994. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.REGULATORY DISCLOSURESFor further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. 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