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Stressed companies are turning to a reliable and booming corner of the credit markets to extend their runways, avoiding the ugly tussles that could come with liability management exercises.

Take billionaire Patrick Drahi’s Altice USA. Its fiber optic subsidiary Cablevision Lightpath is eyeing up to $2.8bn of asset-backed financing. Through another subsidiary, Cablevision Funding, it recently clinched a $1bn facility mainly backed by its hybrid-fiber coaxial assets servicing the Bronx and Brooklyn, with proceeds to fund working capital and prepay debt.

The new financing, led by Goldman Sachs and TPG Angelo Gordon, came just months after its talks with a steering committee of lenders broke down amid market volatility. TPG AG did not have a material position in Altice USA’s existing debt stack and opted to stay out of a majority creditor group that is bound by a cooperation pact that covers 99% of the total debt, affording it the flexibility to partake in the deal away, according to 9fin sources. A representative at Altice USA didn’t respond to request for comment, while TPG declined to comment.

Altice USA is joining a host of companies that is capitalizing on robust investor appetite for non-traditional assets, especially those supporting the global artificial intelligence arms race, to increase their breathing room. Private debt players vying for more yield are ready to fill the gap in what is arguably a $20trn asset-backed financing market (This number is touted as the size of the opportunity by Apollo, which claims $246bn in ABF AUM, and Pimco with $210bn exposure to ABF) as banks pare back activity. Case in point, Meta negotiated a $29bn financing package led by major private credit shops Blue Owl and Pimco consisting of investment-grade bonds backed by Meta’s AI data center assets in Louisiana.

There is a mega trend shifting away from legacy asset-backed investments, such as commercial real estate, said Mike Ginnings, managing director, Credit Solutions at TPG Angelo Gordon. "People are very excited about the digital infrastructure space, and the scale and scope of the opportunity set is preposterously big.”

KKR, which puts the current amount of ABF outstanding at $6.1trn and trending upward, also points out that the ABF market provides diversification benefits to investor portfolios.

Source: KKR ABF Primer July 2025

The road less disputed

One of the reasons why securitization deals have been more popular is because most credit documents have permitted baskets for securitizations that are for the most part flexible on the dollar amount, said Leonard Klingbaum, co-head of Ropes & Gray’s global finance group.

“It is an easier path to raise liquidity and it also opens up the universe to other lenders who are interested in financing these types of deals, and because it’s a less controversial form of a LME,” Klingbaum said.

EQT and DigitalBridge-backed Zayo tapped into a deep base of investment grade investors because of its long-term, enterprise grade contracts. So far this year, the company raised nearly $3bn against its fiber network and cashflows from its direct customers, giving it a far higher leverage point than it could achieve through the leveraged finance markets.

While both ABS and typical LMEs have the effect of raising liquidity for a company, ABS is typically viewed as a more transparent and tailored transfer of risk. This is primarily because ABS are secured by direct claims on a specific portfolio of assets with customized financing terms to reflect that risk. Whereas in a LME, creditors’ claims to key assets or value could be eroded as companies seek to extend maturity, reduce debt, or capture discount.

Indeed, a flurry of private equity-backed companies have reworked their debt through hard ball tactics, angering minority lenders who were given unfavorable terms. Some holdouts, as seen in Del Monte and Better Health, have notched small victories through legal threats this year, potentially fueling more pushback and slimming the pool of willing lenders when companies sound out options in the future.

Deals beget deals

Many market participants view ABS financings as a more transparent process with higher lender protection. The size of such deals could be larger if companies are able to cobble together disparate baskets and exploit vague definitions in their credit documents, instead of relying on the regular way securitization baskets.

Typically, securitization deals involve transferring assets to a special purpose vehicle (i.e. a non-guarantor restricted subsidiary), which usually has more capacity and flexibility under loan documents than for unrestricted subsidiaries, while isolating the securitized assets from the parent company's general credit risk. This has the potential to lead to higher credit ratings for the ABS and lower funding costs.

That was the case in Tropicana, where KKR’s accounts receivable facility was upsized and remained in place while everyone else’s ranking was rejiggered through an aggressive LME earlier this year. Altice USA’s new ABS facility was priced at 8.875% compared to the 11.75% in senior notes it last raised.

"If you can raise ABS financing at a lower cost of capital, you’d do that all day long instead of issuing more expensive high yield bonds," said Mark Bernstein, managing director, Credit Solutions at TPG Angelo Gordon.

The success of securitization financings could also pave the way for more straight forward debt transactions. Zayo just today struck an amend and extend deal with the vast majority of its creditors, who formed a co-op pact earlier this year. The company is expected to partially pay down its secured debt via cash proceeds from its ABS deals and extend all tranches to mature in 2030 with a PIK feature. In exchange, creditors will get equity support from Crown Castle’s fiber business, an acquisition to be funded by cash and new debt.

As for Altice USA, the company has room to pursue more receivables facilities, and proceeds from the recent ABS deal could help repay its most restrictive loan to massively open up its drop-down capacity.

“If you can tap the securitization market and then offer your corporate lenders better coupons and fees, you’ll have some maturity extension and deleveraging,” said Zoltan Donovan, managing director and head of restructuring & special situations at First Eagle Alternative Credit. “It’s the kinder, friendlier way of doing a LME— instead of a coercive one and [the debt] ends up trading poorly.”

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