Investing.com -- S&P Global Ratings has revised the outlook for FTAI Infrastructure Inc. (FIP) to stable from negative, based on the anticipation of the company’s deleveraging in the coming years. The ’B-’ issuer credit and issue-level ratings on FIP remain affirmed, while the ’3’ recovery rating is unchanged.

The outlook revision follows FIP’s acquisition of the remaining 49.9% equity interest in Long Ridge Energy & Power LLC (Long Ridge) on February 26, 2025. The acquisition, along with new contracts at the Jefferson Terminal (Jefferson) and Repauno segments, is expected to contribute to a rise in consolidated EBITDA, leading to FIP’s deleveraging over the next few years.

The acquisition of Long Ridge, which came with a significant increase in its power contract price, is expected to contribute to a substantial EBITDA growth for FIP. However, the transaction has also led to a material increase in debt. In line with the acquisition, Long Ridge issued a $600 million senior secured note and a $400 million term loan to refinance existing debt of about $600 million. The new power contract is at a significantly higher price of $41 per megawatt hour (/MWh), up from $28/MWh, which will account for about 67% of capacity.

Contract executions at Jefferson and Repauno are also expected to increase FIP’s EBITDA over the next few years. Jefferson has executed three new contracts that will start during 2025, and negotiations with other counterparties to increase Jefferson’s capacity are underway. Jefferson is expected to contribute additional EBITDA of about $25 million and $40 million in 2025 and 2026, respectively.

Repauno, on the other hand, is undergoing a phase 2 construction project with an estimated cost of about $380 million, funded through bond issuance in the second quarter of 2025. The project’s capacity is already contracted with two counterparties, representing annual EBITDA of about $40 million-$50 million. EBITDA generation is expected to start in the fourth quarter of 2026 upon project completion.

Despite these positive developments, consistently high leverage remains a key risk for FIP’s capital structure. The company’s S&P Global Ratings-adjusted debt is projected to be about $3.4 billion-$3.5 billion at the end of 2025 after the Long Ridge transaction and Repauno bond issuance. This represents about a $1.2 billion-$1.3 billion increase from FIP’s year-end 2024 metrics. Under the current base-case forecast, FIP’s S&P Global Ratings-adjusted leverage is expected to be about 14x-15x in 2025, 11x-12x in 2026, and 8x-9x in 2027.

The stable outlook reflects the expectation that FIP will deleverage over the next few years following the completion of the Long Ridge transaction and construction projects at operating entities. However, a potential risk remains related to the company’s ability to repay its interest expense using internally generated cash flows.

A downgrade of FIP’s rating could occur if debt refinancing becomes difficult, additional incremental debt is incurred without an immediate cash flow benefit, S&P Global Ratings-adjusted debt to EBITDA is above 15x, S&P Global Ratings-adjusted EBITDA cash interest coverage is below 1x, or liquidity is constrained. Conversely, a positive rating action could be considered if FIP significantly increased the scale of its operation and maintained S&P Global Ratings-adjusted debt to EBITDA below 7x.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.