KBRA is providing an update on Series 2024-1 and Series 2025-1 (collectively, the Notes) from ExteNet Issuer, LLC (the Issuer), the issuer of a communications infrastructure securitization. According to a recent notice posted by Wilmington Trust, N.A (the Indenture Trustee), the following events of default have occurred:
- The Issuer failed to pay accrued interest due on the Notes on the July 27, 2026 payment date.
- Liens granted under the transaction documents with respect to certain cash accounts and the funds on deposit in such accounts have ceased to be perfected, and collections were deposited into accounts which are not subject to control agreements and/or not held in the names of the obligors.
Additionally, servicer advances were not made to cover the interest amounts the Issuer failed to pay. According to the transaction documents, the Servicer must make a determination that the missed interest is not recoverable in order to refuse advancing funds to cover such missed interest payments.
There is no back-up manager designated for these transactions. Under the transaction documents, the occurrence of an Event of Default would result in a manager termination event. Midland Loan Services (the Servicer) would act at the direction of the applicable noteholders to select a replacement manager if ExteNet Systems, LLC (the Manager) were to be terminated.
KBRA placed the ratings on Watch Downgrade on June 19, 2026, after learning that the Manager had been facing liquidity challenges. KBRA continues to seek information regarding current cash management arrangements, collateral performance, and if/when accrued interest will be paid. Absent receipt of timely information and meaningful mitigating developments, including curing any interest shortfalls through servicer advances or available collateral cash flows, significant downgrades would likely occur.
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