Moody's rates Dawn Acquisitions loans B2

Moody's Investors Service said it assigned a first-time B2 corporate family rating and a B2-PD probability of default rating to Dawn Acquisition LLC (AT&T Colocation).

Moody's also said it assigned a B2 (LGD 3) rating to the company's proposed $600 million senior secured first-lien credit facility, which consists of a $550 million seven-year term loan and $50 million five-year revolver.

Dawn is a carve-out of the colocation business of AT&T Inc., which consists of a portfolio of owned and leased data centers and related critical infrastructure assets.

The proceeds from the secured credit facility and new equity will be used to fund the acquisition of Dawn by Brookfield Infrastructure Fund III.

The outlook is stable.

The ratings reflect the strength of the company's geographically diversified data center footprint, which provides retail colocation services to mostly enterprise customers attached to AT&T's global network, Moody's said.

The ratings also consider the company's stable base of contracted recurring revenue, favorable near-term U.S. growth trends for colocation services, modest free cash flow generation until at least 2020 and reduced capital intensity early on due to existing underutilized capacity, the agency said.

These positive factors are offset by the company's small scale, concentrated customer profile and moderately high, but increasing leverage in the early years, Moody's said.

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