Contracts for communications, fiber infrastructure and connectivity, among other services, will collateralize $1.1 billion in asset-backed securities (ABS) from FirstLight Issuer, 2026-1.
Proceeds from the ABS sale will fund FirstLight Fiber reserve accounts, repay indebtedness and help fund general corporate purposes. FirstLight also provides high-bandwidth fiber infrastructure and connectivity services to telecommunications carriers and financial services companies, among its other customers, according to Kroll Bond Rating Agency.
The transaction will sell the notes through five classes of class A, B and C notes is a master trust, which can issue additional classes of notes if certain conditions are met, KBRA said.
FirstLight's A-1-L and A-1-V tranches will issue variable notes, KBRA said, with a few conditions for the A-1-V notes.
For one, the rating agency does not expect the A-1-V notes to be drawn at close and will have to observe certain leverage and debt service coverage ratio (DSCR) conditions. Their anticipated repayment date for two additional one-year terms, KBRA said.
After fees, all remaining outstanding classes of notes will be repaid on a monthly basis and follow a subordination order of payment, KBRA said.
All the notes have an anticipated repayment date (ARD) of June 2031, except for the A-1-V notes, which has an ARD of June 2029.
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As a form of credit protection, the deal has cash trap and sweep conditions, so that if on any payment date the senior debt service coverage ratio (DSCR) is less than or equal to 1.70x, then half of all available funds will be put into the cash trap reserve account.
When the deal closes, the senior DSCR is expected to be about 2.5x at closing, KBRA said.
If the deal enters an amortization period or if it is past the anticipated repayment date, the class C notes will not receive any principal or interest payments until the class A and B notes have been repaid, KBRA said.
