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Moody’s gives Canal expansion thumbs up

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01 October 2022 - At The Banks - BCCR

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Eighteen months after the expansion of the Panama Canal began to operate, its performance exceeded expectations. According to a new Moody’s Investors Service report, the total tonnage of the channel increased 22% in fiscal year 2017 (from October 2016 to September 2017), as its capacity more than doubled, with a clear positive credit impact.

The performance of the Panama Canal Authority (ACP, A2 stable) exceeded the projections, with an increase of 15% of revenues in fiscal year 2017, which resulted in financial indicators stronger than expected. “Solid performance will have a domino effect on US ports and cargo ships, and international trade will further benefit the channel,” says Adrián Garza, Vice President and Senior Analyst at Moody’s.

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The ACP expects revenues to exceed $ 3 billion for fiscal year 2018. Thanks to its strong performance, the ACP registers better-than-expected financial indicators, which supports its high credit quality.

The tonnage of cargo that crossed the channel reached a record of 402.8 million CP / SUAB (volume measurement of the Universal System of Ship Arcing of the Panama Canal) in fiscal year 2017, the largest annual tonnage in history and 22% higher than the previous year. This increase is also significant given that the tonnage of the ACP was relatively stable over the last 10 years, with a compound annual growth rate of 1%.

The channel also benefits from growth in certain business segments thanks to the new locks. Liquefied petroleum gas (LPG) grew 147% and represented 7% of the total tonnage in fiscal year 2017 compared to 4% in 2016. LPG accounted for 4% of total tonnage, compared to 0.5% the previous year.

Challenges

For Moody’s, although there are still challenges, including the legal dispute related to the expansion, the ACP’s solid financial position partially compensates for these challenges.

Source: Newsroompanama.com

Article first appeared at Today Panama, click here to go there

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