QTS ABS II notes draw Fitch expected ratings for 2026 data center refinancing

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QTS 2026 data center notes

Highlights

Fitch Ratings assigned expected ratings and Outlooks to QTS Issuer ABS II, LLC's Secured Data Center Revenue Term Notes, Series 2026-8 to Series 2026-11.
Proceeds from the issuance, following prior A-2 and B note sales totaling $2.705 billion in 2025-2026, will be used to refinance debt, fund reserves, pay fees, and for general corporate purposes.
The portfolio includes over 2.7GW of IT load across 90+ data centers in Phoenix, Richmond, Northern Virginia, and Dallas-Fort Worth, with Fitch analysis indicating full repayment under stress within 25 years.

Expected ratings and transaction structure

As reported by Fitch Ratings, the agency has assigned expected ratings and Rating Outlooks to QTS Issuer ABS II, LLC and QTS Co-Issuer ABS II, LLC for Secured Data Center Revenue Term Notes, Series 2026-8, Series 2026-9, Series 2026-10 and Series 2026-11.

The ratings on all existing Fitch-rated notes are expected to be affirmed at the same time the transaction closes and final ratings are assigned. Fitch says the issuance follows prior A-2 and B note sales in 2025 and 2026 totaling $2.705 billion.

Debt proceeds are set to be used to repay existing indebtedness, fund reserves and estimated third-party fees, and support general corporate purposes. The transaction is structured with an ARD, after which it hyper-amortizes from excess cash flow, while Fitch's ratings do not address any additional interest accrued after the ARD.

The deal also includes a mandatory liquidation mechanism. Under that structure, after the ARD and under certain tenant lease termination or non-renewal conditions, the manager must pursue a sale.

Portfolio footprint and sector implications

The portfolio is managed by Quality Technology Services ABS II Manager, LLC, an affiliate of QualityTech, LP, or QTS, the Overland Park, Kansas-based data center developer and operator. Fitch says the data centers are fully managed by a QTS affiliate that operates more than 2.7 gigawatts of critical IT load capacity across more than 90 facilities.

Fitch's expected paydown analysis indicates the transaction can repay in full under a stressed scenario within the assets' assumed 25-year useful life. The backing assets are located in Phoenix, Richmond, Northern Virginia and Dallas-Fort Worth, tying the transaction to some of the largest and fastest-growing U.S. data center markets.

Our earlier article on Fitch’s upgrade of INNIO NV highlighted the agency raising the company’s Long-Term Issuer Default Rating to 'BB' with a Stable Outlook, citing stronger operating performance and improved financial metrics. We also noted Fitch’s view that INNIO’s product innovation and expansion in renewable-related technologies, along with steady global demand for cleaner energy solutions, supports its credit profile and near-term expectations.

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