Fitch Ratings – Hong Kong/Sydney – 27 Jan 2026: Fitch Ratings has upgraded Port of Newcastle Investments (Financing) Pty Ltd’s (PON) Long-Term Foreign-Currency Issuer Default Rating (IDR) and senior secured debt to ‘BBB’ from ‘BBB-‘. The Outlook is Stable.

RATING RATIONALE

The upgrade reflects the continuity and effective implementation of PON’s shadow regulatory pricing model, including the annual true-up mechanism, which together materially strengthens long-term cash flow visibility, supports deleveraging and enhances refinancing capacity over the next three to five years. The new pricing framework has driven materially lower leverage, with Fitch rating-case net debt/EBITDA averaging 3.9x in 2026-2030.

The company aims to diversify into non-coal businesses. Although leverage is below the current upgrade trigger, further positive rating action would require a sustained record of disciplined reinvestment and distribution policies, and demonstrated progress in implementing the diversification plan.

KEY RATING DRIVERS

Revenue Risk – Volume – High Midrange

PON is the only export port with efficient infrastructure and established connectivity serving the Hunter Valley mining region in eastern Australia. Its high coal exposure is mitigated by the stable thermal and metallurgical coal supply, which is underpinned by 10-year rolling marketable reserve requirements at its two coal terminals. These require contracted producers to maintain sufficient marketable reserves to support forecast volumes over the next 10 years.

Volume risk is further mitigated by the shadow regulatory pricing model, which allows channel service revenue to increase independently of throughput volume through a true-up mechanism. In addition, PON’s diversification strategy enhances its appeal to lenders and investors, aligning with broader sustainability and transition goals.

Revenue Risk – Price – Stronger

PON has demonstrated pricing flexibility and it has adjusted the waterside component of its wharfage charge via a building block approach under the newly implemented shadow regulatory pricing framework. This enables PON to earn a theoretical maximum allowable revenue on its channel service, which also includes the navigational service charge. This maximum is based on its channel asset base, providing an allowance for a return on capital, regulatory depreciation, recovery of operating expenditure and tax.

The revenue not linked to the channel asset base benefits from annual price increases. In addition, about 20% of PON’s revenue comes from long-term contracted lease agreements with either CPI or fixed percentage escalators. Market rent reviews are also applied periodically.

Infrastructure Dev. & Renewal – Midrange
PON has an extensive capex programme to diversify from coal, including around AUD450 million of growth capex in 2026-2030, funded largely by internal cash. Liquidity and funding policies prioritise free cash flow preservation over distributions, limiting debt reliance to fund expansion projects and support stable metrics commensurate with a ‘BBB’ rating. It has no material contractual obligations and has high flexibility to defer expansion. Still, the assessment is limited to ‘Midrange’, as PON is under pressure to reduce coal reliance in the longer term.

Debt Structure – 1 – Midrange
All external debt is senior and secured on a pari passu basis, with tight covenants to protect lenders. No debt-service reserve account is required under the debt documents, but PON’s treasury policy requires a reserve equal to six months of debt service and operating expenditure. Reliance on bullet maturities and rising pressure on lenders to stop funding coal assets exposes PON to refinancing risk. Still, this risk is mitigated by a staggered debt-maturity profile, PON’s investments in diversifying revenue, and various funding sources and investors.

Financial Profile
Fitch’s base case incorporates minor stress on management’s projections for revenue, operating expenses and capex. It also applies a 1% premium to forecast borrowing costs, reflecting the shadow regulatory pricing model and the updated treasury policy that prioritises free cash flow for reinvestment. This results in an average net debt/EBITDA of 3.2x over the next five years.

Fitch’s rating case reflects a reasonable downside scenario characterised by reduced revenue, higher operating expenses, increased capex and a 2% premium applied to forecast borrowing costs, resulting in the debt/EBITDA averaging 3.9x over the next five years.

PEER GROUP

The Port of Melbourne (PoM, Lonsdale Finance Pty Ltd, BBB/Stable) is the closest peer to PON. Both PoM and PON function as landlords for multiple ports, which reduces operational risk. PoM has a diverse throughput mix, while PON is significantly reliant on coal exports, which results in a ‘High-Midrange’ volume risk assessment as opposed to PoM’s ‘High-Stronger’ assessment. PON has a larger expansion plan to diversify revenue, leading to higher execution risk and financing pressure, reflecting the ‘Midrange’ assessment for infrastructure and renewal risk.

However, PoM has a rating-case five-year average net debt/EBITDA of 7.9x, higher than PON’s 3.9x. Nonetheless, PoM’s qualitative strengths on volume risk and infrastructure and renewal risk support its rating at the same level as PON.

We also compare PON to Newcastle Coal Infrastructure Group Pty Ltd (NCIG, senior secured rating: BBB/Stable). PON’s cargo is more diversified than NCIG’s, and it is in a stronger position in the supply chain with minimal competition. However, NCIG’s earlier planned repayment of senior debt compared to that of peers mitigates its exposure to the thermal coal market and reduces its refinancing risk.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade

– A sustained increase in the Fitch rating-case net debt/EBITDA above 6x;
– Material deviation from the new pricing framework;
– Significant increase in refinancing risk, including if execution of the diversification plan is unsuccessful.

Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
– An upgrade in the near term is unlikely. Further positive rating action would require a sustained record of disciplined reinvestment and distribution policies that support diversification away from coal, and continued adherence to the shadow regulatory pricing model, while the Fitch rating-case net debt/EBITDA is sustained below 5.0x.

TRANSACTION SUMMARY
PON operates the largest port on Australia’s east coast and third-largest port in the country by tonnage under a 98-year concession with the New South Wales government, with about 90 years remaining. It has a total land of 780 hectares, with 385 hectares available for development.

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
Climate Vulnerability Signals

The Climate Vulnerability Signal for PON is 58. The signal indicates elevated potential vulnerability by 2035 and is primarily driven by high transition risk due to the port’s focus on thermal coal exports.

The risk is manageable within the rating. Transition exposure is mitigated by diversified export markets, characteristics of Australian coal that support competitiveness, and a pricing regime that insulates cash flow from volume volatility, alongside established operational, insurance and liquidity protections.

ESG Considerations
PON has an ESG Relevance Score of ‘4’ for Management Strategy, as its bullet amortisation debt structure compounds the risk of limited refinancing options. This is due to increasing pressure on lenders to stop financing coal assets, similar to other ports that focus on coal. This has a negative impact on the credit profile, and is relevant to the rating in conjunction with other factors.

The highest level of ESG credit relevance is a score of ‘3’, unless otherwise disclosed in this section. A score of ‘3’ means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch’s ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision.
Source: Fitch Ratings