S&P lifts rating for Galveston's cruise terminal bonds

The port is preparing this summer to issue a revenue bond package to fund construction of the new cruise complex at Pier 16, including a terminal, parking garage and other improvements, as well as bond issuance costs. Co-managers for the financing are Hilltop Securities and Piper Sandler Companies.

'This improved bond rating will allow us to fund the bonds at a lower interest rate, which is always great news,' Galveston Wharves Port Director/CEO Rodger Rees said.

The terminal is scheduled to open in November 2025 for new homeporting by MSC Seascape under a long-term agreement with MSC Cruises. The agreement, allows the port to negotiate with other cruise lines to use the terminal based on availability.

Construction has begun

Construction has begun to convert an existing cargo warehouse into the 165,000-square-foot facility. The $96m cruise terminal project will include marine work on the pier, two passenger boarding bridges and ground transportation areas. 

In addition, the port will build a $55m parking garage with space for approximately 1,700 cars.  The estimated $151m project will be funded with port cash reserves and revenue bonds. 

According to S&P, 'The upgrade reflects our view of the increasing revenues from cruise activity and associated parking revenues from investments made at the port, which we expect will sustain improved financial metrics.'

The stable outlook reflects S&P’s view that the port can meet its forecast growth in revenues due to the investments made and will maintain an improved financial risk profile.

Fitch Ratings

In addition, Fitch Ratings upgraded its outlook for port revenue bonds from stable to positive, while holding its A minus rating.