Zayo Network Services is preparing to issue $846.2 million from the capital markets, secured by a pool of revenue from contracts related to fiber network assets. It is the master trust's third securitization this year.
The Zayo Issuer 2025-3 will issue three classes of notes, all of which are anticipated to repay in October 2032, and have a final maturity date in October 2055, according to Kroll Bond Rating Agency.
KBRA assigns ratings of A-, BBB and BB-, to the classes A2, B and C notes, respectively. Meanwhile, the rating agency affirmed all the ratings to the master trust's outstanding notes.
In the portfolio, fiber and transport and network connectivity account for about 74.9% and 25.1% of revenues, respectively, the rating agency said.
The transaction's entities provide long-haul, middle-mile, and last-mile services to commercial customers. Zayo Network Services provides services, including dark and lit fiber infrastructure and transport services to customers in the northeastern, midwestern and south-central regions of the United States, KBRA said.
Barclays Capital is the sole structuring agent and bookrunner, while Zayo Group is a manager.
In Zayo Issuer's payment structure, senior fees are paid first and then interest is paid monthly on all remaining outstanding classes of notes. After that, the notes repay investors on a senior-subordinate basis.
Credit enhancement comes from a liquidity reserve account that is funded for six months of fixed direct costs, senior fees and interest on classes A and B, plus three months of interest on the C class notes, KBRA said.
There is also a cash trap mechanism that helps preserve liquidity to the notes. If the senior debt service coverage ratio is less than or equal to 1.70x on any payment date, then that will trigger a cash trap period of 50%. During a 50% cash trap period, the cash trap reserve account and capex reserve account will receive 25% and 75%, respectively, of the cash trapping percentage, KBRA said.
Also, if on any payment date the senior DSCR falls below 1.50x before the deal's anticipated repayment date, an amortization period will commence.
