Frontier gains $750M more in asset backed security funds

  • Frontier is getting more asset-backed security funds
  • The ABS notes will be secured by Frontier's fiber assets
  • The company is leading the charge on ABS funding

Frontier Communications today said it has garnered an additional $750 million in asset-backed security (ASB) funding. 

ABS is a type of financial investment that uses income-generating assets as collateral and is an alternative to other ways of raising capital.

Frontier says a “limited-purpose, bankruptcy remote, indirect subsidiary” of Frontier is offering term notes for the $750 million with an anticipated repayment date of May 2031. The notes will be secured by certain of Frontier’s fiber assets and associated customer contracts in North Texas and will qualify as an offering of green bonds.

Frontier intends to use the funds to repay some other debts of the company and for general corporate purposes, including its fiber expansion and copper migration strategies.

The company is leading the charge on ABS funding. Last August, it inked a $2.1 billion ABS deal, making it the first public company in the U.S. to secure funds backed by its fiber-to-the-home (FTTH) assets.

Earlier this year, the analysts at TD Cowen wrote that, “FTTH ABS has been a game changer for Frontier and Ting, creating a new source of capital to help fund their builds.”

While ABS can be an appealing way to finance fiber builds, it is only available to established companies that actually have fiber assets. They can leverage those assets to secure a lower cost of debt.
Speaking at the Connect(X) conference in May, Dan Parfitt, managing director of Investment Banking at Stephens said, “Definitely it’s an attractive way to fund network builds or upgrades. But I think you need to have fiber in the ground, subscribers, all those things, which takes time.” 

Parfitt noted that Metronet Infrastructure and Uniti Fiber have announced ABS funding, as well.