The Port of Houston Authority of Harris County, Texas, issued $393.6 million in bonds to widen a key shipping channel.
The bonds mature between 2024 and 2053, yielding between 3.06% and 4.25%. They pay interest at 5%. The securities received a rating of Aa3 from Moody’s Investors Service and AA+ from S&P Global Ratings.
“The Aa3 rating and positive outlook reflects the port’s strong growth trend and our expectation that robust credit metrics will be maintained even as the port implements a large growth-oriented capital program,” according to Moody’s.
The issuance comes amid growth in U.S. energy exports, and ensuing demand for the Houston Ship Channel, the 52-mile waterway connecting Houston to the Gulf of Mexico. U.S. crude oil exports are twenty times higher than they were a decade ago, according to the Energy Information Administration. In March, the United States exported almost 150 million barrels of crude oil, a record high. The plurality of those exports comes from Texas, which produces almost four times more crude oil than New Mexico, the state which produces the next most crude oil.
The bonds will finance renovations to Houston’s waterways that will ease traffic through the Port of Houston. The authority will use the bond proceeds to widen the Houston Ship Channel by 170 feet near the city of Galveston, widen other upstream segments, and deepen downstream segments. The channel contributes more than $800 billion to the U.S. economy, according to the Greater Houston Partnership, a Houston chamber of commerce.
The bonds are special obligations of the authority, payable by port revenues.
Morgan Stanley & Co LLC served as lead underwriter on the issuance, purchasing the bonds for $426 million. The price reflected an original issue premium of $34 million.