News & Analysis

Puerto Rico toll road reaches financial close

The PR-22 deal is the debut PPP from the Puerto Rico Public-Private Partnerships Authority, not to mention the first brownfield toll roll project in the US since 2006.

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A 40-year concession worth $1.4 billion for a toll road in Puerto Rico reached financial close Thursday, according to a press statement from the Puerto Rico Private Partnership Authority (PPPA)

The lease marked the first-ever public-private partnership (PPP) procured via the PPPA, as well as the largest US transportation-related PPP project of 2011 so far.

In June, Autopistas Metropolitanas de Puerto Rico (Metropolitanas), a consortium teaming Goldman Sachs Infrastructure Partners II (GSIP II) with developer Abertis, won the bid to manage Puerto Rico Highway 22 (PR-22), or the Jose de Diego Motorway, the busiest toll road in Puerto Rico, as well as Puerto Rico Highway 5 (PR-5), a four-kilometre extension of PR-22.

PR-22 itself is an 83-kilometre road connecting to San Juan. Metropolitanas was selected over a consortium of Morgan Stanley Infrastructure (MSI) and OHL Concesiones.

Following its successful bid, Metropolitanas went on to secure $825 million from Banco Popular de Puerto Rico, Santander, Scotiabank, WestLB, La Caixa, Caja Madrid, CIB Credit Agricole, ING Capital, Intesa Sao Paulo, RBC Capital Markets (RBCCM), Siemens Financial Services and Societe Generale.

A statement from Barcelona-headquartered Abertis noted 60 percent of the deal was funded with long-term debt, while 40 percent of the capital came from Metropolitanas. According to Abertis, operating revenue from the toll road topped $90 million in 2010.

Tim Bath, head of US infrastructure banking for RBCCM, while calling the toll road a “great, mature asset,” credited the legislative independence of the PPPA for allowing a prompt bidding and closing process.

“The PPPA made a purposeful decision to have a brownfield project meant for infrastructure investment, not construction,” added Francisco Gonzalez, RBCCM managing director of US municipal finance. Gonzalez pointed out the toll road concession is the first brownfield PPP in the US since 2006.

The PPPA in 2009 initiated a dynamic PPP effort that, in addition to its toll road undertaking, also included a 50-year concession to modernise and redevelop Luis Munoz Marin International Airport. Bidding for that concession is in progress.