Moody’s rates American Tower wireless ABS

Global rating agency Moody’s has assigned provisional ratings to Secured Tower Revenue Securities, subclass 2013-1A securities and subclass 20132A securities (together the 2013 securities), to be issued by American Tower Trust I (the Issuer). The transaction sponsor is American Tower Corporation (AMT; Baa3 stable), one of the leading non-carrier owner/operators of wireless tower assets in the United States. The anticipated repayment date (ARD) for the subclass 2013-1A securities will be in March 2018 and the final distribution date will be in March 2043. The ARD for the subclass 2013-2A securities will be in March 2023 and the final distribution date will be in March 2048.

The 2013 securities represent interests in mortgage loans the Issuer has made to borrowers that are all wholly owned indirect subsidiaries of AMT. The borrowers own or operate, pursuant to long-term lease arrangements, tower sites. The tower sites are leased to a variety of users, primarily major wireless telephony carriers. The cash flows from those leases will be used to repay the mortgage loans and therefore the securities. The subclasses 2013-1A and 2013-2A securities are senior classes and they rank pari passu. Following the issuance of the 2013 securities, the total amount of the mortgage loans will be $1,800,000,000. On the closing date, the borrowers will own or lease 5,195 tower sites. As of January 2013, this tower pool had an annualized run rate net cash flow of approximately $425.6 million. Moody’s determined the ratings on the 2013 securities from an assessment of the present value of the net cash flow that the tower pool is expected to generate from space licenses (leases) on the towers, compared to the cumulative debt being issued for each rating category. Moody’s assessed value for the tower pool was approximately $4.15 billion. The cumulative-loan-to-value (CLTV) ratio of the 2013 securities was approximately 43.4%. The CLTV ratio reflects the CLTV ratio of the combined amounts of the subclass 20131A securities and the subclass 20132A securities. (See Moody’s Approach to Rating Wireless Towers-Backed Securitizations for details on the assumptions applied to arrive at Moody’s assessed value.)

Moody’s ratings address only the credit risks associated with the transaction, particularly the timely interest payments and repayment of principal by the legal final maturity. Other noncredit risks, such as those associated with repayment on the ARD, the timing of any principal prepayments, the payment of prepayment penalties and the payment of Post-ARD Additional Interest have not been addressed and could have a significant effect on yield to investors.

V Score: The V Score for this transaction is Medium, which indicates “average” structure complexity and uncertainty about critical assumptions. The Medium V Score for this transaction is driven by a variety of factors. While historic collateral performance has been good, and there have been no downgrades to date in this sector, the sector’s data dates back 15 years or so, and securitization data goes back only about seven years. Hence.