Private Puerto Rico tollway operator may sell municipal bonds

A subsidiary of Spanish highway operator Abertis is considering borrowing $424 million to fund capital projects for four Puerto Rico toll roads. 

The Public Finance Authority, a Wisconsin-based conduit issuer, approved the municipal bond sale for Puerto Rico Toll Roads LLC, at a June 26 board meeting. PFA would loan the proceeds it borrows to Puerto Rico Toll Roads, which is part of Metropistas, an Abertis subsidiary that operates numerous toll roads and one bridge in Puerto Rico. 

Wilmarie Rivera, a communications manager at Metropistas, said Puerto Rico Toll Roads is still evaluating financing options.

Bloomberg News

"PRTR has commenced a preliminary analysis for possible PABs issuance through PFA," Rivera wrote in an email, referring to the so-called private activity bonds. "PRTR is still in the early stage of the process and continues to analyze several other financing solutions." 

In 2023, Abertis agreed to pay the commonwealth's highway agency $2.85 billion for the right to operate and maintain four highways for 40 years and invest another $2.4 billion in exchange for toll revenue. 

The Puerto Rico Highway and Transportation Authority used the money to pay bondholders after restructuring its debt in the Commonwealth's bankruptcy. 

For years, the authority faced operational and fiscal challenges that resulted in old and crumbling roads, according to the US Federal Highway Administration. PRHTA's deal with Abertis allowed Puerto Rico's highway agency to emerge from bankruptcy without debt, so it could focus on the rest of the island's public highways. 

Metropistas would use the fresh money it gets from the debt sale for road improvements. An Abertis spokesperson declined to comment. 

Three of the four toll roads Abertis won in the 2023 concession agreement are in the San Juan metropolitan area, while another is on the southeast section of the island. They cover about 120 miles, accounting for roughly 60% of Puerto Rico's toll traffic.

Metropistas also manages two other toll roads from an earlier partnership agreement — PR-22 and PR-5 — near San Juan. It also operates the Teodoro Moscoso Bridge, which connects the commonwealth's capital and Carolina, home of San Juan's Luis Munoz Marin International Airport. 

When Hurricane Maria hit Puerto Rico in 2017, PR-22 and PR-5 sustained less damage than publicly run roads, said Adrian Garza, a Moody's Ratings analyst. Concession agreements typically require private companies to operate and maintain infrastructure to defined standards, he said.

The roads managed by Metropistas are "very resilient even in economic downturns and we've seen road traffic pick up following the pandemic, following hurricanes," Garza said. "Every shock that the island or city has suffered, traffic really bounces back very quickly."

In January, the ratings agency upgraded $435 million of senior taxable notes issued by Metropistas to the investment-grade rank — Baa3 — from Ba1. Moody's cited traffic recovery on PR-22 and PR-5 after the pandemic, solid revenue structure and resilience in the face of Puerto Rico's weak economy.

Traffic on PR-22 and PR-5 rose 4.9% in 2023 from the prior year, according to Moody's. The increase reflected tourism growth as well as a lower base of traffic in 2022, caused by the Covid-19 Omicron variant and Hurricane Fiona, the rating company said.

"Metropistas provides an essential service as a primary way of entry to San Juan — the capital city of Puerto Rico — that lacks quality alternative roads and viable public transportation," Moody's wrote in the January release. "As a result, traffic trends have been largely immune to Puerto Rico's weak economic performance."