Verizon is making its second trip to the public securitization market to help financing its customers' smartphones.
The as-yet unsized offering will be issued from the company’s Verizon Owner Trust, or VZOT, a special purpose vehicle, according to a filing Monday with the U.S. Securities and Exchange Commission. The filing was by Cellco Partnership, which does business as New Jersey-based Verizon Wireless, a unit of Verizon Communications.
It comes just four months after the company issued $1.17 billion of securities backed by a revolving pool of contracts from people around the country who recently bought new phones and tablets. The monthly payments people make on their phones are used to pay interest and principal to buyers of the securities
The deals are designed to free up working capital. Verizon and other wireless carriers are increasingly financing their customers’ purchases of mobile devices upfront, rather than selling them in installments.
VZOT-1, which was triple-A rated, was eagerly snapped up by investors, allowing Verizon to unload $168 million in subordinate notes that it had initially planned to retain.
Verizon has also securitized its handset receivables with banks in private transactions.
Verizon raised a total of $2.6 billion in public and private-placed asset securitizations in the third quarter, according to Verizon’s third-quarter earnings report, released Oct. 20. The company’s pool of assets to securitize increased in the third quarter with the sale of 1.7 million 4G LTE devices in the quarter, up 13% year-over-year. That period included the launch of Apple’s updated line of iPhone 7 and iPhone 7 Plus devices, but was also affected by the recall of the Samsung Galaxy Note 7 “phablet” that was discontinued due to exploding battery problems.
