The Zayo Group is preparing to sell $1.5 billion in securitized bonds, secured by revenue from customer agreements with medium and large corporations on infrastructure for dark and lit secured fiber networks.
Zayo Issuer, series 2025-2, will sell four tranches of notes, classes A, B and C, most of which will be fixed rate, according to Moody's Ratings. The senior notes, the A-1-V tranche, will sell notes floating rate notes. All notes have a June 2055 legal final maturity date, Moody's said.
It is Zayo Issuer's second securitization, after its inaugural deal closed in January 2025. Like the first transaction, according to Asset Securitization Report's deal database. Barclays Capital returns, this time as sole structuring agent and joint bookrunner. This time several other firms listed that had been listed previously as manager—Deutsche Bank Securities, Goldman Sachs and Morgan Stanley—did not appear to return to the deal.
Kroll Bond Rating Agency says Zayo Group is the manager on this transaction, with FTI Consulting on the transaction as backup manager.
Coupon and yield information was not available at press time, but the rating agencies did make note of a few positive structural and collateral characteristics. All of Zayo's fiber networks, located in 21 states and the District of Columbia, are in the deal. The pool of highly diversified obligors, 3,100, is mainly composed of medium and large corporations, with top obligors accounting for around 8% of the annualized monthly recurring revenue, Moody's said.
The pool also has a low churn rate, amounting to just 1% over the last four years, and that is mostly due to a lack of suitable replacement clients, Moody' said.
Credit protections include a liquidity reserve account held by the indenture trustee, with KBRA says is Citibank. There is also a liquidity funding note, which Zayo can draw on to pay fees, fixed recurring network operating costs and interest due on classes A and B.
KBRA notes that the deal has several cash-trap and sweep triggers, including a 50% cash trap period. If the interest due on classes A and B notes ever falls below 1.70x, then the cash-trap reserve account and the capex reserve account will receive 25% and 75% of the cash trapping percentage, respectively.
KBRA assigns A-, AAA, and BB- to classes A2, B and C, respectively. Moody's assigns A3 to the A1 and A2 classes; and Baa3 to the class B notes.
