In S&P’s research update issued on Aug. 4, S&P Global Ratings stated that the ACP's operating and financial performance remained in line with S&P's expectations. The ratings affirmation reflects S&P's expectation that following the canal expansion, the ACP will benefit from sustainable traffic growth levels in the upcoming years amid a growing global economy and the canal's larger capacity.
"We expect the Panama Canal operator to maintain its exceptionally strong competitive position, because it's the most economical and time-saving option for trade routes between Americas, Asia, and Europe," according to the S&P Global Ratings research update. "The affirmation also reflects our expectation due to a very stable and predictable cash flow generation, which we attribute to the consistency of demand for the ACP's services."
In addition, S&P Global Ratings kept the ACP's ‘aa’ stand-alone credit profile (SACP) unchanged, stating that the outlook on the corporate credit rating remains stable. S&P Global Ratings noted that this outlook reflects that the ACP will generate relatively stable annual earnings before interest, taxes, depreciation, and amortization (EBITDA) in the next two years that should allow it to post strong credit metrics.
“The canal handles cargo that comes primarily from the U.S., China, Chile, Japan, South Korea, Colombia, Mexico, Canada, Spain and Peru, all of which are credit worthy counterparties,” the research update said. “Moreover, ACP has a very important role in the world commerce because almost 2.5% of it passes through the canal.”
The ratings come just over one month after the inauguration of the Panama Canal Expansion Program on June 26. Since then, 88 vessels have transited the expanded canal, and 266 reservations have been received. The significant demand shown by the maritime industry reinforces the need for the expansion, its future potential, and the benefits it brings to global commerce and the world's consumers, the Panama Canal Authority said.
The expansion program is the canal's largest enhancement project. In 2006, more than 75% of Panamanians approved the project in a nation-wide referendum, and, in 2007, construction began. Construction included new locks on the Pacific and the Atlantic oceans and dredging of more than 150 million cubic meters of material, creating a second lane of traffic along the canal, and doubling the capacity of the seaway. The new locks, which cost $2.75 million, are 70 feet wider and 18 feet deeper than previous locks, but use less water due to the recycling of 60% of the water used in each lockage.
Panamax ships, which have a draft of 39.5 feet or less, are currently the largest ships that can pass through the canal. Due to the expansion, ships with a draft of up to 50 feet are now able to pass.