Metropistas bond issuance rated ‘BBB-‘
However, Kroll and S&P gave varying outlooks for Puerto Rico toll roads project
SAN JUAN – Autopistas Metropolitanas de Puerto Rico LLC—a Guaynabo-based subsidiary of Abertis Infraestructuras SA known as Metropistas that operates two toll roads on the island—has issued $120 million in bonds, the second issuance in three months to refinance part of the company’s debt.
The issuance is one of a few carried out by Puerto Rico’s infrastructure industry since the beginning of the island’s recession in 2006 and the second one since Hurricane Maria struck the island in 2017.
On Feb. 27, Metropistas issued $181 million in bonds to partially refinance a portion of its short-term debt.
“These two bond issues reflect the support and confidence of the market in the successful management of Metropistas during the seven years that the consortium has operated and managed the PR-22 (Expreso De Diego) and PR-5 highways. In addition, given the complicated financial environment in Puerto Rico, these issuances also reflect the market’s appetite for investments in the island’s infrastructure industry, ” Gonzalo Alcalde, CEO of Metropistas, said in a statement.
The debt issuance, acquired mainly by local investors, closed under favorable conditions and investment-grade ratings, an achievement for Metropistas, which has maintained its bond ratings despite the uncertain island economy, Alcalde said.
The release of the new notes allows the company to optimize its capital structure without the need to incur in additional debt, he added.
S&P Global Ratings assigned a preliminary “BBB-” rating to the $120 million, 7% senior secured notes, and to the $181 million, 7.5% senior secured notes. Both are due December 2038.
The $120 million bond issuance will help the company refinance its remaining $118 million loan due 2022.
“The proposed bond issuance is credit positive because it eliminates the toll roads refinancing risk, which is favorable considering the island’s economic uncertainty,” according to S&P.
Kroll Bond Rating Agency (KBRA) also assigned a “BBB-” rating to the $181 million, 7.5% fixed rate, senior secured notes and the $120 million, 7% fixed rate, senior secured notes. The rating company also affirmed its existing rating on 6.75% Senior Secured Notes due 2035 also issued by Metropistas, adding that its “Outlook is stable.”
The rating company gave the project, which is part of Metropistas’ Toll Road Concession Agreement—signed June 27, 2011, with the Puerto Rico Highway Transportation Authority—a stable outlook, saying it believes “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.”
However, S&P’s outlook on the credit is negative “because of Puerto Rico’s poor economic situation and the significant reforms, which could adversely affect our view of [the project’s] traffic and ratemaking flexibility. Furthermore, while the road physically weathered Hurricane Maria and its traffic has progressively returned to normal levels, we question the long-term sustainability of its traffic growth trajectory in light of the relief aid uncertainty, population outmigration, and corresponding declines in employment and economic activity.”
The rating company said it could revise its outlook to stable “if we saw a sustainable organic recovery supported by a viable plan for Puerto Rico that would stabilize the declines in its population and restore economic growth sufficient to support” a higher debt service coverage ratio.
The concession consists of two sections of highway PR-22 and PR-5. 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, for a total of six tolls on PR-22 and one on PR-5. Users pay a fixed toll at each toll plaza.
PR-22 runs along the north coast of the island, connecting the west to San Juan, while PR-5 is a short road on the south-west side of San Juan.
Alcalde said the latest issuance was supported by Puerto Rico’s Fiscal Agency and Financial Advisory Authority and the public-private partnership carried out with the government in 2011.
“With this new issue and the continued support of the Government of Puerto Rico, Metropistas reaffirms its continued commitment to the economic development of the Island through major infrastructure projects,” Alcalde said.
Metropistas hired Credit Agricole Securities (USA) Inc., ING Financial Markets LLC and Santander Investment Securities Inc. as placement agents. Gibson, Dunn & Crutcher and McConnell Valdés LLC acted as legal advisers to the company, while the bondholders hired Milbank LLP and Adsuar Muñiz Goyco Seda & Pérez-Ochoa PSC.
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