S&P views Port Newcastle negatively

S&P said it revised its outlook for Port of Newcastle Investments (Financing) Pty Ltd. to negative from stable and affirmed the BBB- ratings on the issuer and its debt.

“PoNF's operating conditions have deteriorated due to flooding in the Hunter Valley coal mining region. The company's earnings will therefore significantly decline in 2022. We forecast EBITDA will be A$87 million-A$92 million, compared with our previous forecast of A$105 million-A$110 million,” S&P said in a press release.

The agency said it estimates PoNF's coal volumes will be 130 million-135 million tonne per annum (mtpa) in 2022. “This amount would be the lowest coal volume from the port since 2012 (134 mtpa) and substantially weaker than the next weakest year, 2013 (150.3 mtpa).”

Additionally, S&P noted the issuer completed refinancing around A$340 million in bank facilities. “During this process, management extended the tenor of these facilities in comparison to those previously on foot. This longer tenor has in turn led to an expansion in margin and increase cash interest cost, exceeding our previous expectations.”

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