Fitch assigns ‘BBB’ rating to Puerto Rico toll roads project
The rating reflects the stability and significance of the toll road network, despite the island’s economic volatility and demographic challenges.
Fitch Ratings has assigned a ‘BBB’ rating to $286.2 million in senior lien revenue bonds issued by the Public Finance Authority for the Puerto Rico Toll Roads Monetization Project.
The bonds will fund the acquisition, construction and improvement of key toll roads in Puerto Rico. The rating reflects the importance of this toll road network, which serves as a transportation link for commuters across the island.
The ‘BBB’ rating reflects the stability and significance of the toll road network, despite Puerto Rico’s economic volatility and demographic challenges. The toll roads have consistently shown traffic and revenue stability, even during fiscal and weather-related crises. Toll adjustments, linked to inflation, and the long-term nature of the concession agreement support the rating, the credit rating company said.
However, the project faces some risks, particularly refinancing risk related to a term loan maturing in 2028 and the potential for future re-gearing, which could affect financial metrics, Fitch noted.
Fitch’s financial analysis shows the project’s financial performance as strong for its rating level. Key metrics include a minimum project life coverage ratio (PLCR) of 2.1x and leverage ratios — calculated as net debt to cash flow available for debt service (CFADS) — between 7x and 8x through 2030. These figures meet expectations for a ‘BBB’ rating, though future debt restructuring could affect financial stability.
The bond proceeds will finance and improve key toll roads, including PR-52/PR-18, PR-66, PR-53 and PR-20. In addition to construction and development, the funds will cover capitalized interest, required reserves and issuance costs.
The toll roads primarily serve commuter traffic and connect key economic areas. The roads have shown resilience, with steady demand and low elasticity for toll increases, Fitch said, adding that the lack of alternative routes and public transit options strengthens the network’s competitive position.
Fitch also pointed out that the toll adjustment mechanism allows for toll increases of up to 1.5% above inflation annually, insulating the project from political risks and supporting revenue growth.
However, the project faces challenges, including the need for significant capital improvements and maintenance funded largely through debt. While the debt structure includes a cash sweep mechanism to mitigate some risk, the concentrated term loan maturity in 2028 introduces refinancing risk, particularly without a clear policy on future re-gearing, the rating company said.
Fitch compared Puerto Rico Toll Roads LLC (PRTR) with similar entities, such as the Delaware River Joint Toll Bridge Commission (DRJTBC) and ITR Concession Co. PRTR’s demographic and economic environment shares characteristics with DRJTBC, such as operating in a low-growth region.
While PRTR’s financial metrics are comparable to those of its peers, its relatively higher volume risk and lack of a clear policy on debt restructuring are constraints, according to the rating agency.
Fitch assigned a stable outlook to the project, but any underperformance in traffic, revenue or cost overruns could result in a downgrade. Additionally, issuing more senior debt or failing to maintain a minimum PLCR of 1.50x would negatively impact the rating. Conversely, if the project establishes a clear policy on re-gearing and consistently maintains a PLCR of at least 1.60x, Fitch may consider a rating upgrade.
