NEW YORK–(BUSINESS WIRE)–Kroll Bond Rating Agency (KBRA) assigns a BBB- rating to the $181
million, 7.50% fixed rate, senior secured notes due 2038 and the $120
million, 7.00% fixed rate, senior secured notes due 2038 (the “Notes”)
issued by Autopistas Metropolitanas de Puerto Rico, LLC (“Metropistas”).
At the same time, KBRA affirms its existing rating on the 6.75% Senior
Secured Notes Due 2035. The Outlook is Stable.
|Autopistas Metropolitanas de Puerto Rico, LLC|
$120 million, 7.00% fixed rate, senior secured notes due
|BBB- / Stable|
$181 million, 7.50% fixed rate, senior secured notes due
|BBB- / Stable|
$435 million, 6.75% fixed rate, senior secured notes due
|BBB- / Stable|
The Notes are pari passu and cross-collateralized by the same
collateral—namely, the memberships interests in, and all assets of,
Metropistas (in particular, the rights of Metropistas under the Toll
Road Concession Agreement dated as of June 27, 2011 (the “Concession
Agreement”) with the Puerto Rico Highway Transportation Authority
(PRHTA)). Metropistas is owned by Abertis Infraestructuras, S.A.
(Abertis) and GS Infrastructure Partners (GSIP).
The Metropistas concession consists of two sections of highway – PR-22
and PR-5 (the “Project”). The roads have been in operation and tolled
since 1972 when the Buchanan toll plaza was opened. Since then, an
additional six toll plazas have been added giving a total of six toll
plazas on PR-22 and one toll plaza on PR-5. Users pay a fixed toll at
each toll plaza as they drive through. PR-22 runs along the north coast
of the island connecting the west to San Juan. PR-5 is a short road on
the south-west side of San Juan.
The BBB- rating on the Notes reflects our view of the Project’s
strengths, as follows:
Strong Project Rationale: The Project provides significant time
savings to users due to the poor quality of alternative roads. Speed
on alternative roads is about half of that on the Project. The price
per mile of the Project is under 20 cents for both roads which
compares positively with other roads in Puerto Rico and elsewhere in
Concession Agreement Features: The Concession Agreement has a
term of 50 years with 43 years remaining, and includes some of the
following credit positive features: no termination for convenience
from PRHTA is permitted; compensation payment for competing facilities
that reduce traffic on the Project over the concession’s life;
exemption of operational standards under force majeure events;
recordable real interest in the form of an administrative concession
over the roads; and toll increase at US CPI +1.5% annually without
Operating and Traffic History: The Project has a long operating
history since 2011 when the roads were first privatized, and traffic
history since the 1970s when the roads were built. Traffic history has
shown the roads’ significant resiliency to economic recessions,
weather events, and toll increases.
Financial Structure: The Project has strong DSCRs throughout
the term of the debt, even under scenarios assuming no traffic growth,
very low inflation, and higher operating expenses. Under KBRA’s base
case, average DSCRs are around 2.30x and the minimum DSCR is expected
to be 1.45x.
The rating also reflects the Project’s following weaknesses:
Traffic Risk: The Project is fully exposed to traffic or volume
risk which can be volatile depending on the economic and demographic
conditions of the capture area.
Weak Local Economy: The macroeconomic outlook of Puerto Rico is
challenging due to the impact of Hurricane Maria on local businesses,
housing, and infrastructure and the government’s restructuring
negotiations, which have impeded additional investment in the island.
However, progress has been made on both fronts, with the approval of
the fiscal plan in April 2018 and substantial federal aid to be spent
in the next few years in Puerto Rico.
Population Decrease in Capture Area: Population in Puerto Rico
has decreased from its peak in the mid-2000s of close to 3.8 million
to an estimated 3.4-3.5 million in 2017. There were concerns that
Hurricane Maria would cause a deeper exodus to the mainland. However,
many of the people that left in the aftermath of Hurricane Maria –
estimated in the hundreds of thousands – have since returned to the
The Stable Outlook reflects our view that traffic will remain at levels
similar to what has been observed over the past two years with upside
potential due to the recovery efforts on the island. KBRA expects that
Metropistas will continue to successfully operate and maintain the
The rating is based on KBRA’s Global Project Finance Rating Methodology,
published November 28, 2017.
To view the report, click here.
Related Publications: (available at www.kbra.com)
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About KBRA and KBRA Europe
KBRA is a full-service credit rating agency registered with the U.S.
Securities and Exchange Commission as an NRSRO. In addition, KBRA is
designated as a designated rating organization by the Ontario Securities
Commission for issuers of asset-backed securities to file a short form
prospectus or shelf prospectus. KBRA is also recognized by the National
Association of Insurance Commissioners as a Credit Rating Provider and
is a certified Credit Rating Agency (CRA) by the European Securities and
Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is
registered with ESMA as a CRA.
Marisol Gonzalez de Cosio, Senior Director
Andrew Lin, Director