Moody’s lowers FTAI Infrastructure rating to B3 with negative outlook

Investing.com -- Moody’s Ratings has downgraded the corporate family rating (CFR) of FTAI Infrastructure Inc. (FIP) to B3 from B2, indicating a negative outlook. The downgrade also includes FIP’s probability of default rating (PDR) and senior secured notes rating. Alongside these changes, Moody’s assigned an SGL-4 Speculative Grade Liquidity rating to FIP, reflecting weak liquidity.

The downgrade is attributed to FIP’s increased consolidated debt and heightened near-term execution and refinancing risks. Sajjad Alam, a Vice President at Moody’s Ratings, noted the company’s reasonable revenue visibility through existing contracts but highlighted the challenges of boosting earnings and reducing leverage in an uncertain economic and capital markets environment.

The B3 CFR takes into account FIP’s high financial leverage, weak interest coverage, significant debt maturities through 2026, and inconsistent operating track record. The company’s complex capital structure includes over $2.1 billion of non-recourse debt at its various operating subsidiaries and a large amount of preferred obligations with high coupons. Notably, if FIP fails to pay the accumulated and outstanding dividends in cash by January 1, 2026, it could lead to an event of non-compliance, allowing preferred stockholders to elect a majority of Board members.

Despite these challenges, the CFR is supported by FIP’s strategically located and diversified assets, good revenue visibility backed by long-term contracts, a high-quality customer base, and long-lived assets that require low maintenance capital.

FIP’s secured notes, rated B3, represent the only class of debt at FIP, secured by Transtar’s assets and FIP’s equity interests in other subsidiaries. However, these other subsidiaries’ assets are encumbered by substantial amounts of non-recourse debt.

The company’s liquidity is weak, primarily due to its significant debt maturities through 2026. FIP will need to refinance a large amount of debt by the end of 2026 at the Jefferson and Repauno subsidiaries. FIP’s $600 million secured notes are due to mature in June 2027.

The negative outlook reflects the company’s heightened near-term execution and refinancing risks. The CFR could be upgraded if the company can grow its EBITDA and assets according to its plans, improve maturity profile, and achieve strong utilization of its assets. However, an increase in financial leverage or a decline in EBITDA/Interest below 1x could trigger a downgrade.

FTAI Infrastructure Inc. is a publicly traded infrastructure company with exposures to the energy, power, and railroad transportation industries.

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