SBA COMMUNICATIONS CORPORATION
Fitch Ratings has issued a presale report for
RATING ACTIONS
Entity / Debt
Rating
Series 2022-1C
LT
A(EXP)sf
Expected Rating
Series 2022-1R
LT
NR(EXP)sf
Expected Rating
Page
of 1
VIEW ADDITIONAL RATING DETAILS
Fitch expects to rate the
The following class is not expected to be rated by Fitch:
(a) The initial principal balance of this class could be increased up to a maximum amount of$1,150,000,000 . Fitch's ratings reflect the maximum potential issuance amount of$1,150,000,000 , though figures cited throughout this press release and related reports reflect the actual$650,000,000 issuance currently being offered.
(b) Horizontal credit risk retention interest representing 5% of the 2022-1 certificates.
Transaction Summary
The transaction is an issuance of notes backed by mortgages representing approximately 96.4% of the annualized run rate net cash flow (ARRNCF) on the tower sites and guaranteed by the direct parent of the borrower issuer. This guarantee is secured by a pledge and first-priority-perfected security interest in 100% of the equity interest of the borrowers which own or lease 9,906 wireless communication sites. The new securities will be issued pursuant to a supplement to the amended and restated trust and servicing agreement dated as of the expected closing of the series 2022-1 transaction.
At closing, proceeds from the issuance of securities will be used to pay in full the series 2018-1C (
The ratings reflect a structured finance analysis of the cash flows from the ownership interest in cellular sites, not an assessment of the corporate default risk of the ultimate parent,
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 senior classes of this transaction do 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 will be developed that renders obsolete the current transmission of wireless signals through cellular sites. 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:
Declining cash flow as a result of higher site expenses or lease churn, and the development of an alternative technology for the transmission of wireless signal could lead to downgrades.
Fitch's NCF was 2.5% above the issuer's underwritten cash flow. Based on Fitch's determination of MPL, a 10% decline in Fitch's NCF indicates the following rating sensitivities for series 2022-1: 2022-1 class C to 'Asf' from 'Asf'. This sensitivity reflects the issuance amount of
Factors that could, individually or collectively, lead to positive rating action/upgrade:
Increasing cash flow without an increase in corresponding debt, from contractual lease escalators, new tenant leases, or lease amendments could lead to upgrades. However, the transaction is capped at the 'Asf' category, given the risk of technological obsolescence.
Based on Fitch's determination of MPL, a 10% increase in Fitch's NCF indicates the following rating sensitivities for series 2022-1: 2022-1 class C to 'Asf' from 'Asf'.
The presale report includes a detailed explanation of additional stresses and sensitivities on page 11 and 12.
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
Fitch was provided with Form ABS Due Diligence-15E (Form 15E) as prepared by
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.
REPRESENTATIONS, WARRANTIES AND ENFORCEMENT MECHANISMS
A description of the transaction's representations, warranties and enforcement mechanisms (RW&Es) that are disclosed in the offering document and which relate to the underlying asset pool is available by clicking the link to the Appendix. The appendix also contains a comparison of these RW&Es to those Fitch considers typical for the asset class as detailed in the Special Report titled 'Representations, Warranties and Enforcement Mechanisms in Global Structured Finance Transactions'.
Additional information is available on www.fitchratings.com
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