KBRA Upgrades its Rating on Autopistas Metropolitanas de Puerto Rico, LLC’s Senior Secured Notes to BBB from BBB-
28 Mar 2025 | New York
KBRA upgrades its rating on Autopistas Metropolitanas de Puerto Rico, LLC’s (Metropistas) $435 million, 6.75% senior secured notes due June 30, 2035 to BBB from BBB-. KBRA also upgrades Metropistas’s $181 million, 7.5% senior secured notes due December 31, 2038, and $120 million, 7.0% senior secured notes due December 31, 2038, to BBB from BBB-. The Outlook is Stable.
Metropistas operates and maintains the Puerto Rico Highway 5 (PR-5) and Puerto Rico Highway 22 (PR-22) pursuant to a toll road concession agreement with the Puerto Rico Highway Transportation Authority (PRHTA) dated June 27, 2011. Metropistas is owned by Abertis Infraestructuras, S.A. and Ullico Inc. The senior secured notes are pari passu and cross-collateralized by the membership interests in, and all assets of, Metropistas; in particular, the rights of Metropistas under the concession agreement. The upgrade responds to Metropistas’ stable historical performance exceeding KBRA’s forecast for two consecutive years.
Key Credit Considerations
(+) Strong Traffic and Revenue Performance in 2024
Year-over-year (YoY) growth rates for annual average daily traffic (AADT) and annual average daily revenue (AADR) were 0.8% and 7.3%, respectively. Total transactions in 2024 were 3.2% higher than the KBRA rating case, and an increase of about 6.5% to toll rates effective January 1, 2024, resulted in revenues exceeding KBRA’s rating case forecast by 8.5%.
(+) Strong Financial Performance
Deposits to the operating expenses and major maintenance accounts were 5.3% lower than expected under the KBRA rating case. Cash flows available for debt service (CFADS) had a positive performance similar to revenues, with a YoY growth of 5.6%, and also compared favorably against KBRA’s forecast, exceeding it by 15%. As a result, quarterly debt service coverage ratios (DSCR) during the year were higher than KBRA’s expectations.
Surveillance Rating Rationale
Traffic and revenues outperformed KBRA’s rating case for 2023 and 2024, showing strong debt service coverage ratios (DSCR) of 1.98x on average, compared to our expectation of 1.71x for the same period. Metropistas has benefitted from toll rate increases considerably above KBRA’s original forecast, due to higher-than-expected inflation. Even if traffic performance were to stabilize to KBRA’s original expectations, the higher-than-forecast toll rates are expected to maintain the projects’ outperformance in revenues and DSCRs compared to KBRA’s rating case.
Outlook
The Stable Outlook on the notes reflects KBRA’s belief that the assets will continue to perform in line with recent years, with stable trends in both traffic and revenues. An upgrade on the ratings could occur if the projects’ financial performance continues to exceed KBRA’s forecast, with long-term average DSCRs above 2.1x. A ratings downgrade could occur if traffic and revenues deteriorate and result in DSCRs consistently below 1.9x.
Rating Sensitivities
Higher traffic volumes coupled with higher toll rates that result in better-than-expected revenues could result in a rating upgrade. Sustained lower-than-expected operating and capital expenditures could also impact the rating. A significant improvement in the economics of Puerto Rico that results in an increase in traffic could also result in a rating upgrade.
Lower-than-expected tariff increases due to an extended period of deflationary pressures could impact the revenue generation profile of the project and the rating. Lower-than-expected traffic volumes could also impact the rating. A trend of higher-than-forecast operating and capital expenditures could also impact the rating.
ESG Considerations
Environmental Factors
A carbon tax or other carbon pricing mechanism could make driving more expensive and result in lower traffic levels. Metropistas’ ESG plan successfully installed microgrids in all the toll plaza facilities to offset their fossil fuel consumption. In the long term, this strategy could also protect the project from future energy costs increments and improve overall asset resiliency.
Social Factors
Metropistas is exposed to social changes that could impact the way people work and live and that could ultimately result in lower use of the roads. As part of the implementation of their new ESG program, Metropistas will launch local projects to improve the overall sustainability of the community.
Governance Factors
As a project finance transaction with strong covenants, Metropistas has limited impact of governance factors. In order to align with the sponsors’ ESG plans, Metropistas developed an ESG plan that will ultimately focus on reaching carbon neutrality and improve the community’s sustainability.
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