Weakening coal industry conditions and declining investor appetite for the coal sector are increasing the risk that existing coal miners in AAPT's service area will not undertake sufficient investment to maintain their production over the medium to long term.
Such a scenario will in turn challenge AAPT's ability to renew its take-or-pay contracts with these mines over time.
The continuation of stable cash flows generated under these take-or-pay contracts -- with established coal miners -- is a key credit underpin for the terminal given their production track records and ownership in certain instances by highly rated counterparties.
Renewal of these contracts on equivalent terms, however, remains dependent on the coal mines' long term confidence and capacity to pay.
Moody's said it understands that certain miners are contracting for tonnage with AAPT on a shorter-term basis, which potentially raises the terminal's exposure to volume risk and cyclical factors to the extent they are not converted into long term contracts.
The outlook change to stable also considers refinancing risk, with 170 million Australian dollars maturing in November 2020, 150 million Australian dollars in September 2021, and a further 500 million US dollars of notes maturing in 2022.
Moody's said AAPT is in the process of refinancing this year's maturing debt.
AAPT's Ba2 rating is underpinned by the visibility of its cash flows under take-or-pay style contracts with a diversified set of users which provide it with the right to pass through all operating costs and earn a rate of return on its asset base.
AAPT also has the contractual ability to recoup lost revenue from failed counterparties on tariff reset dates, said Moody's.