S&P Revises Liquidity Assessment on SBA Communications (SBAC) to 'Strong'; Ratings Affirmed

S&P Global Ratings said it affirmed its 'BB-' corporate credit rating on SBA Communications Corp. (Nasdaq: SBAC). The outlook is stable.

We are revising our liquidity assessment on U.S. wireless tower operator SBA Communications Corp. (SBA) to strong from adequate because we expect its sources of liquidity to exceed its uses by more than 2x over the next 12 months.
At the same time, we are affirming our 'BB-' corporate credit rating and all other ratings on the company.
The stable outlook reflects our expectation for modest EBITDA margin improvement and free operating cash flow (FOCF) growth associated with adding tenants to existing towers, and that financial metrics will remain elevated, above the mid-7x area, given the company's penchant for acquisitions and share repurchases.

• We are revising our liquidity assessment on U.S. wireless tower operator SBA Communications Corp. (SBA) to strong from adequate because we expect its sources of liquidity to exceed its uses by more than 2x over the next 12 months.
• At the same time, we are affirming our 'BB-' corporate credit rating and all other ratings on the company.
• The stable outlook reflects our expectation for modest EBITDA margin improvement and free operating cash flow (FOCF) growth associated with adding tenants to existing towers, and that financial metrics will remain elevated, above the mid-7x area, given the company's penchant for acquisitions and share repurchases.

At the same time, we affirmed the 'BB' issue-level rating on SBA's senior secured debt at wholly owned subsidiary SBA Finance II LLC. The recovery rating on this debt remains '2', which indicates our expectation for substantial (70%-90%; upper half of the range) recovery in the event of a payment default.

We also affirmed the 'B+' issue-level rating on SBA's senior unsecured debt at wholly owned subsidiary SBA Telecommunications LLC. The recovery rating on this debt remains '5', which indicates our expectation for modest (10%-30%; upper half of the range) recovery in the event of a payment default.

In addition, we affirmed the 'B' issue-level rating on SBA's senior unsecured debt. The recovery rating on this debt remains '6', which indicates our expectation for negligible (0%-10%) recovery in the event of a payment default.

"The affirmation follows our revision of SBA's liquidity profile assessment to strong, which reflects our expectation that the company's sources of liquidity will cover uses by more than 2x over the next 12 months and that net sources will remain positive, even with a 30% decline in forecasted EBITDA," said S&P Global Ratings credit analyst Scott Tan.

The change in liquidity assessment does not affect the 'BB-' corporate credit rating.

The stable outlook reflects our expectation for modest EBITDA margin improvement and FOCF growth associated with adding tenants to existing towers, which new tower investments partially offset. Still, we expect financial metrics will remain elevated, above the mid-7x area, given the company's penchant for acquisitions and share repurchases.

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