Zayo Group Launches $2.3 Billion Asset‑backed Securities Offering

Why It Matters

The deal provides Zayo with low‑cost capital to expand its fiber footprint while offering investors a structured, high‑grade exposure to a growing telecom infrastructure asset class.

Key Takeaways

• Zayo issues $2.3 bn asset‑backed securities for dark fiber contracts.
• Five tranches launched; A‑rated notes hold bulk of issuance.
• Senior notes mature 2036; longest maturity extends to 2056.
• Credit enhancements include six‑month liquidity reserve and cash‑trap provisions.
• Fiber services comprise 69.7% of the pool’s monthly recurring revenue.

Pulse Analysis

Zayo Group’s $2.3 billion ABS issuance arrives at a time when demand for high‑capacity fiber networks is accelerating, driven by cloud migration, 5G rollouts and enterprise data‑intensity. By securitizing contracts tied to dark fiber and wavelength services, Zayo converts long‑term operating cash flows into immediate financing, a strategy increasingly common among infrastructure owners seeking to fund expansion without diluting equity. The transaction’s size places it among the largest telecom‑related ABS deals of 2026, underscoring investor appetite for stable, recurring‑revenue assets.

The structure features five tranches across two series, with A‑rated notes holding the majority of the capital and receiving the highest credit rating from KBRA. BBB and BB‑rated classes absorb additional risk, while a layered credit‑enhancement framework—six‑month liquidity reserve, cash‑trap triggers at a senior DSCR of 1.70×, and rapid amortization below 1.50×—protects senior investors and aligns cash‑flow discipline with Zayo’s operational performance. These mechanisms mirror best‑in‑class securitization practices, offering a clear hierarchy of repayment that mitigates default risk.

For the broader market, Zayo’s ABS highlights how fiber providers can leverage capital‑market tools to fund network build‑outs amid tight bank lending conditions. Investors gain exposure to a sector with predictable monthly recurring revenue—nearly 70% of the pool stems from fiber and transport services—while enjoying the credit protection typical of structured finance. The successful placement may encourage peers to explore similar securitizations, potentially expanding the pool of tradable telecom infrastructure securities and deepening the market’s liquidity.

Deal Summary

Fiber network provider Zayo Group announced the issuance of $2.3 billion in asset‑backed securities backed by contracts for dark fiber and wavelength services. The ABS, structured in two series (2026‑1 and 2026‑2) with multiple tranches, is being underwritten by Barclays and is slated to close on May 29, 2026. The securities carry ratings of A‑ to A2 and BBB, with credit‑enhancement features including a liquidity reserve and cash‑trap provisions.