Puerto Rico port concessionaire bond outlook lowered by S&P

A private concessionaire selected by Puerto Rico to renovate the island's cruise ports had its barely investment-grade bonds' outlook revised to negative.

S&P Global Ratings lowered the outlook on San Juan Cruise Port LLC's BBB-minus senior debt rating to negative from stable Wednesday, citing worries about the pace of construction. About $160.3 million in bond debt is affected. 

The Series 2023A-1, A-2, A-3 and B bonds mature from 2039 to 2046. 

The Puerto Rico Ports Authority and the Puerto Rico Public-Private Partnership Authority selected SJCP, a wholly owned subsidiary of Global Ports Holding PLC, to upgrade its facilities. 

The Puerto Rico Industrial Tourist Educational Medical Environmental Control Facilities Financing Authority (AFICA) issued the bonds, which are not backed by the government of Puerto Rico or any of its agencies or instrumentalities, communications staff for the Puerto Rico Fiscal Agency and Financial Advisory Authority said in an email.

Repayment will "come solely from the operating cash flows of San Juan Cruise Port LLC and related collateral support," the email said. "As such, the issuance of these AFICA bonds do not impact the credit or financial resources of the government."

Progress on the port's pier 4 has been slower than initially planned "due to subcontractor's performance, according to the project management, and higher-than-expected port utilization rates during the works," S&P said. 

There is an October 2027 long-stop date that would allow lenders to accelerate the bonds, and the construction delay elevates the possibility the project may remain incomplete by that point, S&P said. 

"The recently implemented remediation plans should accelerate construction progress," S&P said. 

SJCP is making marine repairs at Pier 4 and the Pan American Piers and non-marine repairs at Pan American Pier 1 and 2 cruise buildings. 

SJCP is engaged in a $425 million project to repair and upgrade the ports as part of a 30-year public-private partnership it has with the Ports Authority. 

SJCP, the Ports Authority and the Public-Private Partnership Authority didn't immediately respond to requests for comment.

Another government concession, for Puerto Rico Tollroads, had its rating upgraded by Fitch Ratings to BBB-plus from BBB in December.

In December, Puerto Rico Gov. Jenniffer González Colón filed a lawsuit seeking to end the island's contract with LUMA Energy as provider of electrical transmission and distribution services, adding another unknown factor to the Puerto Rico Electric Power Authority bankruptcy.