S&P rates Autopistas Metropolitanas notes BBB-

S&P said it assigned a preliminary BBB- rating to Autopistas Metropolitanas de Puerto Rico LLC's new $120 million 7% senior secured notes due December 2038.

The proceeds will be used from the proposed issuance to refinance its entire remaining term loan A due 2022.

The agency also said it affirmed the BBB- rating on its existing $435 million 6.75% senior secured notes due June 2035 and $181 million 7.5% senior secured notes due December 2038.

The outlook is negative.

The proposed issuance is credit positive because it eliminates the toll road's refinancing risk, which is favorable considering the island's economic uncertainty and its impact on road users, S&P said.

Under the proposed issuance, all project debt is amortizing and – with all of its debt maturing no later than 2038 – Autopistas benefits from a considerable equity tail of about 23 years, the agency said.

Despite a toll rate increase of 7% and the island's ongoing economic challenges, including a GDP contraction of nearly 8% in 2018, the project's traffic has continued to grow in 2019, S&P said.

The negative outlook reflects the uncertainty around whether the toll road can continue to attract users while implementing future toll-rate increases, which will depend on the island's ability to resuscitate its flagging economy, the agency said.

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