Despite the operational interruptions caused by Hurricane Beryl, the Galveston Wharves is moving forward with its $160 million revenue bond sale, showcasing its strength and resilience. The port’s ability to rebound quickly after the storm, with only minor damage and power outages, is a testament to its robust infrastructure and preparedness.
Prior to the bond sale, S&P Global Ratings upgraded the rating on the wharves and terminal first lien revenue bonds to A from A-minus, with a stable outlook. This upgrade reflects the increasing revenues from cruise activity and investments made at the port, which are expected to improve financial metrics. Additionally, Fitch Ratings revised the outlook on its A-minus rating to positive, citing significant revenue growth.
Record Cruise Activity
The Port of Galveston experienced a surge in cruise passengers in 2023, reaching a record 1.49 million, after a decline in 2020 due to the COVID-19 pandemic. The port serves five cruise lines, with a sixth, MSC Cruises, scheduled to come on board in November 2025. Cruise-related activities accounted for a significant portion of the port’s operating revenue, highlighting the importance of this sector to the port’s financial health.
Bond Issue Details
The bonds issued by the port are secured by its net revenue from cruise, commercial, and cargo operations. Proceeds from the bond sale will finance a cruise complex at Pier 16, including a terminal, parking garage, and other improvements. The deal includes Series A bonds subject to the alternative minimum tax and Series B non-AMT bonds, with serial maturities between 2026 and 2044.
The bond issue is being led by Piper Sandler and Hilltop Securities, with co-managers including Robert W. Baird & Co, Raymond James, and Siebert Williams Shank & Co. Bracewell is serving as the bond counsel, with Huntington Capital Markets and RBC Capital Markets as co-municipal advisors. Despite the challenges posed by Hurricane Beryl, the port and its partners are working together to ensure the success of the bond sale and the continued growth of the port.
Hurricane Beryl’s impact on the Houston area serves as a reminder of the economic repercussions of natural disasters. President Joe Biden has granted a major disaster declaration for Texas, allowing reimbursement for expenses related to debris management and emergency protective measures. Moody’s Ratings analyst Nick Samuels emphasized the vulnerability of Texas’s economy to hurricane damage, particularly in high-risk areas like Harris County.
While Hurricane Beryl may have caused temporary disruptions, the Galveston Wharves is moving forward with its bond sale with confidence and determination. The port’s resilience, combined with the support of its partners and stakeholders, will ensure its continued success and growth in the face of future challenges.