SBA Communications (NASDAQ: SBAC) is using revenue from mortgages on its U.S. towers to raise $1.8 billion in asset-backed securities (ABS) from the SBA Tower Trust in series 2024-1 notes. Scheduled to close on October 11, SBA Tower Trust is a master trust that will issue 2024-1C, -2C and -1R tranches, with a roster of managers that includes Barclays, Citigroup Global Markets, Goldman Sachs, JPMorgan Securities, Mizuho Securities and Morgan Stanley, according to Asset Securitization Report.
SBA will use the transaction to repay investors through a senior-subordinate structure. The 1C and 2C notes have anticipated repayment dates of October 2029 and October 2027, respectively, according to Moody’s Ratings.
Strong fundamentals like long-term tower lease agreements, a favorable outlook for the wireless sector and the underlying mortgage structure support a positive credit rating on the notes, Moody’s said. SBA generates recurring cash flows from its contracts with the Big 3 U.S. MNOs. T-Mobile (NASDAQ: TMUS), AT&T Mobility (NYSE: T), and Verizon Wireless (NYSE: VZ) together accounted for 88 percent of the company’s 2Q24 domestic site leasing revenues, Inside Towers reported.
Moody’s points out that an ABS structure, involving towers, is designed to give investors security and priority over other creditors in case of default or bankruptcy, by providing both guarantees, in this case, from SBA as the parent company and a pledge of equity interests in towers as additional collateral.
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