The recent battering of parts of Texas by Hurricane Beryl has not deterred the upcoming bond pricing for Galveston Wharves. Despite the operational interruption caused by the storm, the port announced that the $160 million revenue bond sale will proceed as planned. It is commendable to see how strong and resilient the port is, as highlighted by Rodger Rees, the Galveston Wharves port director and CEO. The fact that a Royal Caribbean cruise ship sailed from Galveston just a day after the Category 1 hurricane hit the region showcases the port’s ability to bounce back quickly from such setbacks.
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 was based on the increasing revenues from cruise activities and associated parking revenues resulting from investments made at the port. Similarly, Fitch Ratings revised the outlook on its A-minus rating to positive from stable, citing significant revenue growth expected from the full resumption of cruise activities in 2023. These rating upgrades reflect confidence in the port’s financial stability and potential for growth.
The Port of Galveston serves as a crucial hub for cruise, commercial, and cargo operations, generating substantial revenue streams. In 2023, the port’s net revenue from these operations totaled $29.8 million, with cruise-related activities accounting for 72.1% of the port’s operating revenue. The increase in the number of cruise passengers in recent years, reaching a record 1.49 million in 2023, further underscores the port’s importance as a key player in the industry. The upcoming addition of MSC Cruises in November 2025 is expected to enhance the port’s offerings and attract more visitors.
The $160 million bond sale, led by Piper Sandler and Hilltop Securities, aims to finance a cruise complex at Pier 16, including a terminal, parking garage, and other enhancements. The bond issue comprises $111.52 million of Series A bonds subject to the alternative minimum tax and $48.47 million of Series B non-AMT bonds with serial maturities between 2026 and 2044. The involvement of co-managers such as Robert W. Baird & Co, Raymond James, and Siebert Williams Shank & Co reflects strong market interest in the port’s growth prospects. Bracewell is serving as the bond counsel, with Huntington Capital Markets and RBC Capital Markets acting as co-municipal advisors.
Repercussions of Hurricane Beryl
Hurricane Beryl’s impact, including strong winds, rain, power outages, and flooding in the Houston area, underscored the region’s vulnerability to natural disasters. President Joe Biden’s approval of a major disaster declaration for Texas, allowing reimbursement for up to 75% of hurricane-related expenses, highlights the severity of the situation. Moody’s Ratings analyst Nick Samuels emphasized the economic repercussions of such storms, with over a third of Texas’s GDP at high risk from hurricane damage. Harris County, accounting for 22% of the state’s GDP, is particularly susceptible to such disasters, indicating the need for enhanced preparedness measures.
While Hurricane Beryl posed challenges for the region, the resilience of Galveston Wharves and the proactive steps taken by authorities and stakeholders demonstrate a commitment to overcoming adversity and driving growth. The bond pricing for the port signifies investor confidence in its long-term prospects and ability to navigate unexpected disruptions effectively. Moving forward, continued investment in infrastructure, disaster preparedness, and sustainable practices will be key to ensuring the port’s success and resilience in the face of evolving challenges.