KBRA Assigns Preliminary Ratings to ALLO Issuer, LLC, Series 2023-1 Senior Secured Notes
KBRA is assigning preliminary ratings to the Series 2023-1 Class A-1-VFN Notes, Class A-1-L Notes, Class A-2 Notes, Class B Notes, and Class C Notes (the Series 2023-1 Notes) from ALLO Issuer, LLC, (the Issuer), a communications infrastructure securitization.
The ALLO 2023-1 Notes represent ALLO Communications LLC's (ALLO, the Company, or the Parent) first securitization. The transaction structure is a master trust, and as such, the indenture permits the issuance of additional classes and series of notes subject to certain conditions including rating agency confirmation. The proceeds from the sale of the Notes will primarily be used to fund certain reserve accounts, repay existing indebtedness, and for general corporate purposes, which may include a distribution to the Parent for growth capital expenditures.
The business of the Issuer is to own, manage and operate fiber optic communication systems infrastructure for the delivery of communication services to customers including, but not limited to, broadband, telephone, video solutions, as well as other revenue-generating services. Customers include individual residential consumers (representing approximately 69% of customer lines as of Q1 2023) and businesses comprising commercial and governmental organizations (together representing approximately 31% of customer lines) that utilize fiber infrastructure encompassing geographic locales. The assets will consist of fiber-to-the-premise (FTTP) infrastructure, customer agreements, related easements, rights of use and other access agreements (collectively, Fiber Network Assets). Each collection of networks and their assets are collectively referred to as "Fiber Networks" within certain geographic locales (Contributed Markets).
As of March 31, 2023 (the Series 2023-1 Cut-off Date or Cut-off Date), the Issuer provides internet services within the Contributed Markets to over 97,000 subscribers across over 129,000 customer lines across Nebraska and a portion of Colorado, which have an annualized run rate revenue (ARRR) of approximately $126.9 million. Within the Contributed Markets, data, video, and voice represented approximately 68.3%, 19.3% and 11.4% of LTM Q1 2023 revenues.
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Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.
A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.
Information on the meaning of each rating category can be located here.
Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.
Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.
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