The ALLO Issuer, series 2025-1, will sell $200 million in asset-backed securities, to refinance the outstanding balance on a series of notes issued in 2023. Ultimately, ALLO Issuer's securitized debt is secured by a portfolio of customer contracts on broadband, telephone, video and related services.
ALLO Issuer, series 2025-1, will use proceeds from the issuance to pay down the 2023-1, A1V notes, according to ratings analysts at Kroll Bond Rating Agency. The deal will sell the notes to investors through three tranches, classes A2, B and C, according to the rating agency.
All the notes are expected to repay in April 2030, and they also have the same final maturity date, April 2055.
The capital structure supporting ALLO Issuer, series 2025-1, calls for senior fees and class A1L principal and interest to be paid first. After that, interest is paid monthly on all remaining outstanding note classes, KBRA said.
The transaction also includes certain performance conditions that trigger cash trap and cash sweep mechanisms, according to KBRA. Among those conditions is a stipulation that say if the senior debt service coverage ratio equals 1.75x or less, then half of the transaction's available funds will be deposited in the cash trap reserve account.
Otherwise, of a certain percentage of the monthly revenue has not been directed into a control account, then 25% of the available funds will be deposited into the cash trap reserve account.
The notes also get credit boosts from an amortization period and subordination, KBRA said.
ALLO provides fiber optic communication systems to 132,300 customers across Nebraska, Colorado, and Arizona, Individual residential customers make up the majority of ALLO's customer lines as of the collateral pool's January 2025 cutoff date, with 69%, KBRA said. Businesses made up of commercial and governmental organizations account for the remaining customer lines, about 31%. Data, video and voice services represent 74%, 16% and 10% of revenues, respectively.
KBRA assigns A- to the A2 notes, BBB to the B notes and BB- to the C notes.
