Contracts and subscriptions to high-quality fiber lines for data and voice services will secure $664.6 million in asset-backed securities (ABS) coming to market from the Fidium master trust.
In this cycle the platform will issue three tranches of notes through Fidium, LLC and Fidium Fiber Finance Holdco LLC, with classes A-2, B and C coming to market for a closing date of March 31.
Assets in the trust include conduits, cables, network-level equipment, access rights and customer agreements, according to analysts at Fitch Ratings. The rating agency also says the pool has an implied 170% haircut, and that the debt multiple, relative to its net cash flow on the rated classes, is 10.2x.
Compared to the debt-to-issue net cash flow, leverage is 8.5x, Fitch said.
The rating agency also notes that Drivetrain Agency Services will service the notes.
Notes have an anticipated repayment date of March 2031, with a final maturity date of March 2056.
Morgan Stanley is the deal's structuring agent, according to rating agencies, which will repay interest monthly in all outstanding notes sequentially.
Otherwise, the structure includes an amortization trigger, which will prioritize repaying principal and interest to the class A notes over classes B and C, KBRA said.
If note performance deteriorates to the point where interest is deferred from the class C notes, it will be capitalized, KBRA said.
Yet some of the deal's strongest insulation from poor performance comes from the pool itself, analysts say. Fidium's collateral pool comes from a diverse customer base, of about 351,000 consumer fiber subscribers in eight core states according to Kroll Bond Rating Agency, which also assessed the notes. Three states—Maine, New Hampshire and Texas—account for more than half of the portfolio balance, with 23.4%, 22.5% and 11.3%, respectively, KBRA said.
As American workers have shifted to remote, work-from-home and hybrid work situations, and as work uses data more intensively, demand for high-quality, internet services continue to expand, KBRA said.
KBRA assigns A-, BBB and BB- to the A-2, B and C tranches, while Fitch assigns A-, BBB- and BB- to the A2, B, and C notes, respectively.
