S&P Global Ratings on Thursday removed its CreditWatch negative placement on Autopistas Metropolitanas de Puerto Rico, LLC and affirmed its ‘BBB-‘ rating on the company’s $435 million senior secured notes due 2035. The outlook is negative.
“The CreditWatch listing originally reflected concerns that due to the significant economic strain the commonwealth is under, the new government could look for opportunities to undermine the project’s concession agreement,” S&P said.
Autopistas Metropolitanas de Puerto Rico, LLC — better known as metropistas — is the public-private partnership that operates Puerto Rico’s PR 22 and PR toll roads on behalf of the Puerto Rico Highways and Transportation Authority.
“As government plans have taken shape, however, it is becoming evident to us that Puerto Rico sees public private partnerships as a way to support needed infrastructure investment,” S&P said.
The agency cited legislation announced on Jan. 11 to amend the Public Private Partnership (P3) Act to improve the legal framework that promotes P3s on the island.
“The fiscal plan submitted to [the Puerto Rico Oversight, Management and Economic Recovery Act] on Feb. 28, 2017 demonstrates the government’s intent to use P3s as effective tools in their economic revitalization process,” S&P said.
The ratings agency also affirmed the ‘BBB-‘ senior secured issue rating on the $435 million senior secured notes of Autopistas Metropolitanas de Puerto Rico LLC to reflect driver utilization that remains consistent with expectations, despite declining GDP and island outmigration.
S&P supported its affirmation by saying that traffic on the toll roads continued to grow modestly at 0.74 percent through 2016, and outperformed its 2016 traffic projection of negative 0.14 percent.
“This does not include dynamic toll lane traffic growth. Revenue growth was about 2 percent in the same period. This revenue figure includes dynamic tolling lanes that contribute about 3 percent of total revenue,” S&P stated.
However, S&P kept the negative outlook on the debt to reflect its view “that although we expect our traffic forecast to continue to be conservative, and toll road usage continue at levels that support the rating, we cannot rule out that policy impacts adopted for the commonwealth could cause us to lower our transaction growth expectations. Currently, we assume zero growth in new toll transactions from 2018 to the foreseeable future.”