MOODY'S INVESTORS SERVICE INFRASTRUCTURE AND PROJECT FINANCE The authority is planning additional parity debt in 2023 to finance $500 million of projects. This would entail a peak debt balance of $840 million in fiscal 2024, representing a strong 1.3x forecasted operating revenue. The current and anticipated 2023 issuance are structured to produce level annual debt service. Debt-related derivatives None. Pensions and OPEB The authority reported a net pension liability of $1.3 million in fiscal 2021. Based on Moody's standard adjustments to reported pension data, we calculate an adjusted net pension liability (ANPL) of $260 million in fiscal 2021. The main difference between the port's reported net pension liability and Moody's ANPL is the rate used to discount the pension liability, which was 7.3% for the port and 2.7% for Moody's. Moody's adjusts the reported pension liabilities of entities that report under governmental accounting standards in order to enhance comparability across rated issuers. Under governmental pension accounting, liabilities are discounted using an assumed rate of investment return on plan assets. Under Moody's adjustments, we value liabilities using a market-based discount rate for high quality taxable bonds. We view the pension liability as contained. Plan eligibility was closed to new participants effective July 1, 2011, and has been replaced by a defined contribution plan. The authority has contributed well in excess of the actuarially determined level in recent years and has maintained a nearly fully funded status, reporting a net pension asset in 2018 and 2019. Over the last four years (2018-2021), the ANPL has averaged $176 million, or a low 0.35x operating revenue. The closed nature of the plan will contain and ultimately eliminate the liability, and GPA has demonstrated a commitment to proactively managing it. ESG considerations Environmental At the port sector level, overall credit exposure to environmental risks is moderate, reflecting exposure to carbon emissions from ocean vessels, cargo handling equipment, and truck or rail carriers, the majority of which operate diesel-powered equipment. The moderate risk also reflects exposure to coastal storms, sea level rise and severe weather, as many ports are situated in coastal locations with limited to no elevation above sea level. Social Social issues can either weigh on or enhance the credit quality of Ports. Social considerations most relevant to our credit analysis include (1) customer relations, (2) human capital, (3) health and safety, (4) responsible production and (5) demographic and societal trends. There are four potential channels through which social issues generally affect credit quality — reputational, operational, litigation and regulatory risks. Governance The authority operates as a self-supporting governmental enterprise. The authority has no stockholders or equity holders and is directed by a governing board whose members are appointed by the Governor, from the State at large, to serve four-year, staggered terms. Of the 13 governing members, 12 are appointed by the Governor, and the Director of the Governor’s Office of Planning and Budget is an ex officio member. The authority's financial statements are included in the State's general purpose financial statements as a discretely presented component unit. The strong explicit and implicit support from the State of Georgia (Aaa stable), which has provided support to GPA in the form of real estate development, economic development, transportation infrastructure investment and direct capital contribution, is a positive factor incorporated in our assessment of the credit profile. We also incorporate the essentiality of GPA to the state in facilitating trade, economic development and a competitive business environment. 7 14 October 2021 Georgia Ports Authority: New rating for $420 million of bonds
