Fitch Ratings has affirmed
RATING ACTIONS
Entity / Debt
Rating
Prior
A-2 72349CAB8
LT
Asf
Affirmed
Asf
Page
of 1
VIEW ADDITIONAL RATING DETAILS
Transaction Summary
This transaction is an issuance of notes backed by issuers' equity interest in the entities that own and operate 1,167 wireless communication towers in 40 states. Though Fitch typically rates transactions that have significant mortgaged collateral, this transaction has exhibited strong historical performance (19.94x debt service coverage ratio [DSCR]; 0.57x debt multiple) and sizeable scheduled amortization (transaction is fully amortizing).
KEY RATING DRIVERS
Credit Risk Factors: The major factors impacting Fitch's determination of cash flow and Maximum Potential Leverage (MPL) include: the large and diverse collateral pool, creditworthy customer base with limited historical churn, market position of the operator, capability of the operator, limited operational requirements, high barriers to entry and transaction structure.
Technology-Dependent Credit: Due to the specialized nature of the collateral and potential for changes in technology to affect long-term demand for tower space, similar to most wireless tower transactions, the transaction does not achieve ratings above 'Asf'. The securities have a rated final payment date over 30 years after closing, and the long-term tenor of the securities increases the risk that an alternative technology - rendering obsolete the current transmission of wireless signals through cellular sites - will be developed. Wireless service providers (WSPs) currently depend on towers to transmit their signals and continue to invest in this technology.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative rating action/downgrade:
Downgrades are unlikely barring a material change to the underlying assets or sector, given the very low leverage exhibited by the transaction and given the notes are fully-amortizing. While unlikely, in the event of a sustained and substantial decline to asset cash flow, downgrades are possible.
Factors that could, individually or collectively, lead to positive rating action/upgrade:
Structural contract escalators or new contracts resulting in increase in cash flow without an increase in corresponding debt could lead to upgrades. However, due to the specialized nature of the collateral and potential for changes in technology to affect long-term demand for tower space, similar to most wireless tower transactions, the transaction does not achieve ratings above 'Asf'.
While this transaction demonstrates several of the attributes required to exceed this cap under Fitch's Digital Infrastructure Securitization Rating Criteria, upgrades are unlikely given the lack of a senior-perfected security interest in the real property and/or fixtures in addition to equity pledges.
Best/Worst Case Rating Scenario
International scale credit ratings of Structured Finance transactions have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of seven notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of seven notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAAsf' to 'Dsf'. Best- and worst-case scenario credit ratings are based on historical performance. For more information about the methodology used to determine sector-specific best- and worst-case scenario credit ratings, visit https://www.fitchratings.com/site/re/10111579.
USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10
Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
ESG Considerations
Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg.
Additional information is available on www.fitchratings.com
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