Investing.com -- Moody’s Ratings has affirmed the Baa3 senior unsecured rating and (P)Baa3 senior unsecured shelf rating of American Tower Corporation (NYSE: AMT ), a leading real estate investment trust (REIT). In addition, the rating agency has upgraded the company’s outlook to positive from stable.

This affirmation reflects the REIT’s strong position in the global wireless infrastructure market, its steady revenue and income stream, robust fixed charge coverage, and excellent liquidity.

The upgraded outlook is due to Moody’s expectation of improved earnings stability for American Tower over the next one to two years. This improvement is anticipated to be supported by the company’s strategic shift towards developed markets and data centers, and reduced exposure to emerging markets. The REIT’s improved leverage metrics since the end of 2023 and its disciplined approach to capital allocation also contribute to the positive outlook.

The Baa3 ratings for American Tower are based on its extensive and diverse portfolio of tower assets and stable cash flows from long-term tenant leases with strong counterparties. However, the ratings also consider the REIT’s significant tenant concentration, long-term risks from technological transformation, and potential for pressure on margins due to exposure to ground leases.

American Tower’s portfolio includes approximately 42,000 tower sites in the U.S. and 107,000 internationally. The properties are primarily leased to large wireless carriers in different regions. The expansion of 5G networks and increased data usage are expected to drive demand for tower capacity and support tenant retention.

In recent quarters, American Tower has exited several emerging markets, including India, Australia/New Zealand, and the fiber operations in South Africa. The proceeds were primarily used to pay down debt and fund growth in developed markets.

As of the first quarter of 2025, American Tower’s net debt to EBITDA and effective leverage ratios were 5.6x and 62.2%, showing improvement with the reduction in debt. The net debt to EBITDA is expected to remain in the 5-5.5x range and effective leverage close to the current level. Income growth over the next two years will help the REIT maintain its fixed charge coverage ratio in the low 4x range despite higher coupon for refinanced debt.

American Tower’s liquidity is strong with 96% availability on its two revolving credit facilities with an aggregate capacity of $10 billion. The REIT is expected to refinance most of its remaining debt maturities in 2025 and 2026, $5.7 billion in total, with new unsecured debt. The company has shown good access to capital, having issued $4.6 billion of new debt in 2024 and year-to-date 2025.

American Tower’s ratings could be upgraded if it maintains strong operating metrics, including high tenant retention and stable cash flow growth, while sustaining fixed charge coverage above 4.0x and net debt to EBITDA below 5.5x. Continued execution of its strategy and growth in developed market assets would also support an upgrade.

A downgrade is unlikely given the positive outlook. However, it could occur if operating performance weakens significantly, leverage increases above 6.5x on a sustained basis, or tenant credit quality deteriorates significantly.

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