Hurricane Beryl’s impact on parts of Texas has not halted the upcoming bond pricing for Galveston Wharves. Despite the operational disruption caused by the storm, the port is proceeding with a $160 million revenue bond sale. The once-Category 5 storm made landfall as a Category 1 hurricane 100 miles south of Galveston, but the damage to the port was minor. The port director and CEO, Rodger Rees, highlighted the strength and resilience of the port, emphasizing that a Royal Caribbean cruise ship departed from Galveston just a day after the hurricane hit.
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 influenced by the increasing revenues from cruise activity and investments made at the port. Fitch Ratings also revised the outlook on its A-minus rating to positive due to significant revenue growth fueled by contractual agreements with leading cruise lines.
The Port of Galveston saw a significant rebound in cruise activity, with the number of passengers reaching a record high in 2023 after a decline caused by the COVID-19 pandemic. The port serves multiple cruise lines and is set to welcome MSC Cruises in November 2025. Cruise-related activities accounted for a significant portion of the port’s operating revenue in 2023, showcasing the importance of the cruise industry to the port’s financial health.
The revenue bonds are secured by the port’s net revenue generated from various operations, including cruise, commercial, and cargo activities. The proceeds from the bond sale will finance the development of a cruise complex at Pier 16, which includes a terminal, parking garage, and other enhancements. The bond issue, led by Piper Sandler and Hilltop Securities, consists of Series A bonds subject to the alternative minimum tax, and Series B non-AMT bonds with serial maturities between 2026 and 2044. Co-managers involved in the deal are Robert W. Baird & Co, Raymond James, and Siebert Williams Shank & Co, with Bracewell serving as the bond counsel and Huntington Capital Markets and RBC Capital Markets as co-municipal advisors.
Hurricane Beryl’s strong winds and rain caused extensive power outages and flooding in the Houston area, prompting President Joe Biden to issue a major disaster declaration for Texas. Moody’s Ratings analyst Nick Samuels highlighted the area’s vulnerability to hurricane-related damage, with over a third of Texas’s GDP at high risk. Harris County, accounting for 22% of the state’s GDP, was particularly susceptible to the economic repercussions of the storm.
The resilience and adaptability of Galveston Wharves in the face of natural disasters like Hurricane Beryl demonstrate the port’s ability to overcome challenges and continue its operations. The bond pricing and upgrades in ratings reflect confidence in the port’s future growth and development, underscoring its importance as a key economic hub in the region.