OREANDA-NEWS. S&P Global Ratings has revised its outlook on the Port of Corpus Christi Authority, Texas' port revenue bonds to positive from stable. At the same time, S&P Global Ratings affirmed 'A+' rating on the port's debt outstanding.

"The outlook revision reflects our view that, with continued operational growth, strong financial performance, and more definite capital funding needs, an upgrade is possible during the two-year outlook period," said S&P Global Ratings credit analyst Anita Pancholy. We understand the port is in the early phases of a long-term capital plan that will likely increase spending. The magnitude and funding of future projects are key factors in our assessment. The rating reflects our view of the following credit strengths:The port's good business position, with four major refineries near it, which provides steady demand for petroleum imports and exportsVery strong debt service coverage, at 5.9x in fiscal 2015 and budgeted to remain very strong in 2016 Low debt burden, given the port's sizeOffsetting these strengths are what we consider high concentration in the petroleum industry and the likelihood for reductions in liquidity and potential for increased debt levels to fund the capital plan.

The port is a navigation district and political subdivision of the State of Texas, with boundaries mirroring those of Nueces and San Patricio counties. It is on Texas' southeast coast, approximately 150 miles north of the Mexico border and the port of Brownsville, and 200 miles south of the ports of Houston and Galveston. A 30-mile, 45-foot deep channel connects it to the Gulf of Mexico. The port's operations center on petroleum, which has historically composed more than 80% (85.9% in 2015) of its tonnage. Its top revenue generating customers -- Valero Energy Corp., CITGO Petroleum Corp., and Flint Hills Resources LLC -- made up approximately 23% of total operating revenues in fiscal 2015. However, this is down from a high of 43% in 2009, because the port's operating revenues have increased and diversified in the past five years, and most key tenants have minimum annual guarantees in addition to base rental payments.

The positive outlook reflects our expectation that demand for the facilities will continue to support financial metrics at levels we consider at least strong. The outlook also reflects our view that the port might be able to sustain some level of increased capital expenditures given the strength in its financial profile.

We could raise the rating if we determine that the impacts of the port's capital funding needs on debt service coverage and liquidity are commensurate with a higher rating.

We could revise the outlook to stable if the port's capital needs increased significantly such that it required additional debt during the two-year outlook, diluting debt service coverage.