Retail customers' contract payments on internet, cable and telephone services powered by high-quality fiber lines will underpin $1.2 billion in asset-backed securities.
The deal, Metronet Infrastructure Issuer, LLC, Secured Fiber Network Revenue Notes Series, 2022-1, will issue the notes. Goldman Sachs and KKR Capital Markets both acted as structuring agent and underwriter on the deal.
Revenue from operations and benefits from a perfected security interest in the securitized assets—conduits, cables, network-level equipment, access rights, customer contracts, transaction accounts and a pledge of equity from asset entities—comprise the collateral assets, according to a pre-sale report from FitchRatings.
The collateral pool consists of about 207,000 retail customers across 60 issuer-defined markets in five states, representing about 55% of the sponsor's business. Metronet, the deal's sponsor, is the industry's largest privately owned pure play fiber provider in North America, according to Fitch.
Founded in 2005, the company built its first network along 66,000 home passes in 10 communities in Indiana, and has since spent about $1.9 billion to build out a fiber network that passes households in 119 markets in 10 states. As of July 2022, the company's fiber network passed approximately 1.2 million locations and served approximately 376,000 subscribers.
Subordination from classes B and C provides credit enhancement to the class A notes.
Fitch notes that Metronet is a technology dependent credit. Changes in technology can affect long-term demand for digital infrastructure, the senior classes of notes do not achieve ratings above 'Asf'.
Aside from 'A' on the class A-2 notes, Fitch will assign a rating of 'BBB' to the class B notes and 'BB-' on the class C notes.
All of the classes of notes have an anticipated repayment date of October 2027, and an October 2052 rated final payment date.
