Uniti Fiber Holdings is sponsoring its first asset-backed securities (ABS) deal, a $589 million deal being described as a whole business securitization repaid from the company's revenues in communications infrastructure.
Uniti Fiber, based in Little Rock, Ark., owns, manages and operates fiber optic cable communications that deliver what the industry calls dark and lit fiber infrastructure and transportation, according to Kroll Bond Rating Agency. That includes mobile infrastructure such as fiber-to-the-tower, small cell backhaul, enterprise internet and data center connectivity, and what the industry calls type two access, KBRA said.
In so-called Type Two services a communications provider sells services to end customers that use another provider's last-mile infrastructure, KBRA said.
Uniti Fiber ABS Issuer, series 2025-1, is expected to close at the end of the month, and will sell notes to investors through three tranches of notes. All of them have an April 2055 final maturity date, KBRA said.
KBRA assigns A to the A2 notes; BBB to the class B notes and BB- to the class C.
The deal will repay interest following a senior-subordinate structure. The structure also features a cash trap and cash sweep provisions. If, on any payment date, the senior debt service coverage ratio (DSCR) exceeds the cash trap trigger leverage ratio, then that will trigger a cash trap mechanism, where 50% of available funds will be deposited into the cash trap reserve account.
The company's inaugural securitization pool will give the issuer fiber network assets and infrastructure, composed of 19,580 circuit connections across four states, according to KBRA. Those assets had monthly recurring charges of $10.7 million, KBRA said. Telecommunications carriers, large- and medium-sized entities across a range of industries, government entities, data center operators, and hyperscale cloud providers are among the pool's customers, the rating agency said.
Uniti Fiber's three largest customers represent 36.0% of monthly recurring charges, and across the pool the weighted average (WA) remaining tenant lease term based on monthly recurring charges is about 3.8 years without renewals, KBRA said.
Also, if the senior debt service coverage ratio (DSCR) falls below 1.50x, it will trigger an amortization event. During that time, the trust will not pay any interest to the class C notes until class A2 and B have been repaid.
