UPDATE 1-Moody's: Puerto Rico airport deal is credit positive

Mon Mar 4, 2013 9:56am EST

March 4 (Reuters) - Final approvals of a deal to privatize Puerto Rico's main airport add up to a credit positive for the heavily indebted Caribbean island, Moody's Investors Service said on Monday.

"The public-private partnership will provide the cash-strapped Puerto Rico Ports Authority (unrated), the airport's operator, with an immediate up-front lease payment of $615 million," Moody's said.

"Of that amount, $491 million will pay down loans and loan guarantees from the Government Development Bank for Puerto Rico (rated 'Baa3 negative'), making the transaction credit positive for GDB, and in turn for the Commonwealth of Puerto Rico (rated 'Baa3 negative')."

Both federal regulators and Puerto Rico's new governor, Alejandro Garcia Padilla, signed off last week on a 40-year agreement with Aerostar Airport Holdings LLC to operate Luis Munoz Marin International Airport.

The deal for the Caribbean's busiest airport, with nearly 9 million passengers a year, is a milestone in Puerto Rico's privatization program and was valued by Puerto Rico officials at $2.57 billion.

"The privatization and transfer of risk will benefit the commonwealth at a time when the government is struggling with a seven-year economic downturn, lower-than-projected general government revenues in the current fiscal year ending 30 June, high debt levels and a severely under funded pension system," Moody's said.

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