QTS ABS II secures Fitch ratings for new $1 billion data center notes

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QTS Fitch data center notes

Highlights

Fitch Ratings assigned final ratings and Stable Outlooks to $1 billion of QTS ABS II secured data center notes across Series 2026-8 to 2026-11.
The securitization is backed by seven hyperscale data centers totaling 253.5 megawatts and 2.2 million square feet, with two assets contributed in this issue.
Proceeds from the new notes, which follow $2.705 billion of prior 2025 and 2026 offerings, will repay existing debt, fund reserves, and support corporate purposes.

New ratings for 2026 note issuance

As reported by Fitch Ratings, the agency assigns final ratings and Stable Outlooks to QTS Issuer ABS II, LLC and QTS Co-Issuer ABS II, LLC secured data center revenue term notes, Series 2026-8, 2026-9, 2026-10 and 2026-11.

The new ratings cover $320.5 million of Series 2026-8 class A-2-I at 'AAAsf', $57.5 million of Series 2026-8 class A-2-II at 'AA-sf', $162 million of Series 2026-8 class A-2-III at 'Asf', and $130 million of Series 2026-8 class B at 'BBB-sf'. Fitch also rates $40 million of Series 2026-9 class A-2-II at 'AA-sf', $215 million of Series 2026-10 class A-2-I at 'AAAsf', and $75 million of Series 2026-11 class A-2-I at 'AAAsf', all with Stable Outlooks.

The notes are limited-recourse obligations secured by mortgages that create first-priority mortgage liens on the asset entities' real property interests in the data centers, along with perfected security interests in related personal property, fixtures, reserves and escrows.

Portfolio scale and financing use

The securitization is backed by a portfolio of seven turnkey hyperscale data centers, including two assets contributed at this issuance, spread across four markets. The portfolio totals 253.5 megawatts and 2.2 million square feet.

This issuance follows prior A-2 and B note offerings in 2025 and 2026 totaling $2.705 billion. The asset portfolio is managed by Quality Technology Services ABS II Manager, LLC, an affiliate of QualityTech, LP, and the debt proceeds are used to repay existing indebtedness, fund reserves and estimated third-party fees, and support general corporate purposes.

In our earlier article, Fitch’s 'AAA' rating for AGL CLO 48 Ltd highlighted the agency’s view that the CLO structure could withstand a range of stress scenarios over the life of the transaction. We also noted that the rating rationale leaned on the underlying portfolio’s credit quality and the manager’s ability to navigate changing market conditions, with ongoing surveillance focused on performance as conditions evolve.

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