Georgia Ports Authority; Ports/Port Authorities Upside scenario We could raise the rating over the next two years if GPA meets or exceeds forecast container growth and we believe the authority can maintain DSC at levels we consider extremely strong. Downside scenario Although unlikely, we could lower the rating if the authority issues significant additional debt above our expectations with the net revenue pledge, resulting in DSC and debt-to-EBIDA metrics consistent with a lower rating. Credit Opinion Enterprise Risk Profile Our assessment of the authority's enterprise risk profile as very strong reflects its extremely strong economic fundamentals, low industry risk, very strong market position, and very strong management and governance. Economic fundamentals The service area has extremely strong economic fundamentals due to its strength and size.While, in our opinion, the primary service area for the authority is within the state of Georgia, particularly the Atlanta metropolitan statistical area, 45% of the U.S. population can be served within a 72-hour rail radius of Savannah. In addition, the U.S. economy has cooled somewhat but remains resilient, leading S&P Global Economics to revise forecasts of real GDP growth for 2021 and 2022 to 5.7% and 4.1%, respectively, from estimates in June 2021 of 6.7% and 3.7%. Supply disruptions remain the leading suspect slowing the world's biggest economy, and the delta variant is now an additional drag. Recent economic data indicate people are pulling back after the reopening earlier this year. Still, the near-term health of the U.S. economy remains strong and our current GDP forecast, if correct, is still the highest reading since 1984. The U.S. economy has felt less impact with each wave of the coronavirus and has been able to withstand the damage.We maintain our assessment of U.S. recession risk over the next 12 months at 10%-15%--our lowest assessment in six years. For more information, see "Economic Outlook U.S. Q4 2021: The Rocket Is Leveling Off," published Sept. 23, 2021, on RatingsDirect. Market position We consider the port's overall market position very strong, given it is a dominant provider of port services facing modest competition, primarily with South Carolina State Ports Authority. The port is strategically important to the regional economy as an import and export hub for manufacturers and other businesses in Georgia and neighboring states. The authority, primarily an owner-operated port as opposed to a landlord port, operates deep-water port terminals in Savannah and Brunswick, an inland river terminal in Bainbridge, and an inland rail terminal in Chatsworth; a northeast Georgia inland port is under construction. Over the past fifteen years, the authority's container volume has increased at a faster rate than that of any other major port in the country, with a 6.6% compounded annual growth rate (CAGR), reaching 5.3 million containers in fiscal 2021 (fiscal year-end June 30). In fiscal 2021, container cargo made up approximately 90% of operating revenues. Part of the growth is due to the location of facilities being advantageous for rail capabilities into the Midwest and with regional interstate access. The port is the second-most-connected U.S. WWW.STANDARDANDPOORS.COM/RATINGSDIRECT OCTOBER 8, 2021 4
