ALLO Communications, which owns, manages and operates fiber optic communications systems, is preparing to sell about $824.4 million in asset-backed securities (ABS) backed by contract payments from fiber optic networks, through the ALLO Issuer Secured Fiber Network Revenue Notes.
The 2026-1 series of notes is the fourth transaction out of a master trust, according to analysts at Fitch Ratings and Kroll Bond Rating Agency.
Three tranches of notes will be issued to investors, and the A2 tranche will issue the bulk of the debt, $613.7 million, according to the rating agencies. Also, the notes have an anticipated repayment date of June 2031, with a rated final payment date of June 2056, the rating agencies said.
Proceeds from the current transaction, for which Morgan Stanley is the sole structuring agent and joint active bookrunner, will be used to pay down the outstanding series 2023 A1V balance and the balance on the A2, B and C notes, according to KBRA.
Allo is managing the deal, with FTI Consulting as backup manager, the rating agencies said.
The collateral pool contains about 210,120 contracts, according to Fitch.
Interest on the notes will be repaid sequentially, and principal will be paid according to the amortization schedule, the rating agencies said.
Fitch notes that the transaction has a prefunding account for the class B and C notes that totals $20 million, or 1.6% of total debt, exclusive of the maximum VFN commitment amount. Those funds will be used during a 12-month period after closing and be released depending on the level of increased cash flows that the asset entities bring into the transaction.
The rating agency also says ALLO Issuer 2026-1 has a variable funding note, which has a maximum commitment of $150 million. This is senior to the A2 notes, and in most scenarios will rank pari passu with them should a default and acceleration of the notes occur, the rating agency said.
Fitch assigns ratings of A, BBB and BB- to classes A2, B and C, respectively. KBRA assigns A-, BBB an BB- to the A2, B and C tranches, respectively.
