ExteNet is preparing to sell $117.5 million in securitized bonds, secured by a pool of revenue from wireless network and data providers, which lease antennas, fiber and related equipment in their businesses.
The collateral pool, as of the December 31 cutoff date, consisted of 245 distributed network systems networks across 35 states and Washington, D.C. They had an aggregate annualized run rate revenue of about $85.9 million, and an annualized run rate net cash flow amounting to $46.4 million, according to Kroll Bond Rating Agency.
As for the transaction, ExteNet Issuer 2025-1 will sell the fixed-rate notes through three tranches, which all have a final maturity date of July 2054. Structured as a master trust, the deal allows the issuance of additional classes and series of notes.
Barclays Capital is sole structuring advisor on the deal, which is expected to close on June 30, according to Asset Securitization Report's deal database.
ExteNet will repay investors through a senior-subordinate structure, according to the rating agency. The capital structure includes a cash trapping condition. Should the senior debt service coverage ratio—which includes debt service for classes A and B notes only—is less than or equal to 1.70x, then the deal will direct 50% of available funds to a reserve account.
Other structural safeguards include a cash sweep condition. If a cash trap condition persists for longer than six consecutive months, half of available funds will repay all classes of notes in alphanumeric order, KBRA said.
Moody's pointed to several asset features that boost the deal's credit. Three leading wireless carriers—AT&T, T-Mobile and Verizon Communications account for 99%, of the DNS networks annualized run rate return (ARRR) in the deal.
The asset pool's ARRR escalates by 1.5% regularly, from year two through the 21st year and farther, Moody's said.
Moody's assigns ratings of A3 and Baa3 to classes A2 and B, while KBRA assigns ratings of A, BBB and BB- to classes A2, B and C.
