ALLO Issuer Secured Fiber Network Revenue Notes—a master trust secured by contract payments on fiber network access that powers their internet, phone and cable services—is raising $239.9 million through the series 2024-1. Proceeds will pay down the outstanding balance of series 2023-1 A-1-V notes.
The collateral consists of high-quality fiber lines to a network of about 107,497 customers located across 26 markets located in Nebraska and Colorado, according to a Fitch Ratings presale report.
Slated to close on July 31, the deal offers class A, B and C notes through three tranches. Asset Securitization Report's deal database notes that yields range from 6.0% on the Fitch A-rated tranche to 11.4% on the BB- tranche. Ratings analysts at Kroll Bond Rating Agency also assessed the notes, saying they all have a final maturity date of July 2054.
For the markets that contributed to the transaction collateral, Fitch analysts said, many of the subscribers made up 55.8% of annualized run rate revenue. Since the 2023-1 note issuance, 11 additional issuer-defined markets in Nebraska and Colorado were added to the trust. This additional collateral makes up 8.2% of the transaction revenue. Drivetrain Agency Services is servicing the notes, according to Fitch.
Some 156,670 customer contracts are in the portfolio, with the top three tenants representing 2.1% of the revenue in the pool, Fitch said. In a base case scenario, Fitch also says, net cash flow on the pool is $78.9 million, implying a 17.4% haircut to issuer base case net cash flow.
Most network customers are individual residential consumers (69%), according to KBRA analysts. Commercial and government organizations make up the remaining business customer component, the rating agency said.
KBRA assigns ratings of A-, BBB and BB- to the class A2, B and C notes. Fitch, meanwhile, assigns A to the class A2 notes; BBB to the class B notes; and BB to the class C notes.
