Fitch has assigned BBB- rating on the fresh senior unsecured notes offering by Crown Castle International Corp. (NYSE:CCI). The wireless tower company is seeking refinancing through the sale of fresh bonds as it seeks to trim its debt burden. The company has outstanding borrowings and credit facility that it wants to repay, at least partially, through the new Notes.
Based on its assessment of Crown’s leverage position, Fitch is convinced that the new notes fit BBB- rating.
What’s Fitch’s BBB- rating based on?
Fitch cites a number of factors to back its BBB- rating for Crown Castle International Corp. (NYSE:CCI)’s fresh notes. The firm says that Crown has demonstrated strong and recurring cash flow generation trend, especially from the business of leasing wireless towers. The other compelling thing in the company is its strong EBITDA margins.
Fitch also takes note of Crown’s market focus, which is mainly in the U.S. According to Fitch, focusing on the U.S. means that Crown is exposed to slightly lower risks. As such, the lower risks profile also helps remove uncertainty in the company’s cash flow story. With better insight into the cash flow trend, balance sheeting deleveraging also becomes clearer.
Crown Castle International Corp. (NYSE:CCI)’s recent asset transactions also make Fitch more confident in its BBB- rating on the new debt. For example, the firm cites that Crown acquired two key tower assets or at least gained rights to the towers in transactions with AT&T Inc. (NYSE:T)and T-Mobile US Inc (NYSE:TMUS). Crown used equity to finance $4.8 billion tower acquisition from AT&T in 2013. The company also took hold of wireless tower from T-Mobile in 2012 in a $2.5 billion transaction. These acquisitions highlight Crown’s progress in growing its asset portfolio for future growth.
The reason Fitch has faith in Crown Castle International Corp. (NYSE:CCI)’s new debt as well as the long-term future is that it sees strong demand ahead for its wireless towers. The growing demand for mobile broadband services and connection will push carriers to up their wireless network capacity and Crown is well-suited to fill the gap and benefit from the strong demand.