Moody’s cuts Aerostar notes to Ba2

Moody's Investors Service said it downgraded Aerostar Airport Holdings, LLC's $350 million of senior secured notes rating to Ba2 from Ba1 and changed the outlook to negative concluding the review initiated on July 17.

Aerostar Airport Holdings, LLC is the project company selected by the Commonwealth of Puerto Rico (B2 negative) to operate Luis Muñoz Marín Airport, the largest commercial airport in Puerto Rico, under a 40-year lease agreement. Aerostar is jointly owned by Highstar Capital IV LP and Aeropuerto de Cancun SA de CV. In March 2013, Aerostar issued $350 million of 5¾% senior secured notes due 2035.

Moody’s said the downgrade recognizes that the airport's creditworthiness cannot be completely de-linked from the current stresses facing the government, economy and population of the Commonwealth of Puerto Rico (B2 negative). The region's current situation makes credit quality more uncertain for companies operating under government-granted concessions governed under local law whose cash flow can also be affected by changes in the economic environment or potentially by interference from the government.

The rating action acknowledges the challenges of systemic risks for all local credits, particularly those that have a dependence on the local economy for cash flow, the agency. In addition, the Commonwealth's fiscal distress could impact the ability of the Puerto Rico Ports Authority (unrated) to make compensation payments to Aerostar in the event of adverse actions or termination.

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