2 Ways To Look At Sprint's New Spectrum-Backed Securities

Following Sprint Corp's S move to securitize its spectrum, Citi said it considers the transaction in two ways. The company announced plans to securitize 14 percent of its spectrum for up to $7 billion relative to the $16.4 billion value an independent third party placed on the spectrum.

Analyst Michael Rollins noted that the implied spectrum value suggested by the transaction structured as an asset-backed securitization represents a premium to the preceding transactions. This, according to the analyst, could give rise to questions on whether the transaction is setting up a new bull market for spectrum valuations.

Citi sees the transaction as a positive for Sprint's liquidity and cost of borrowing, giving it additional time and flexibility to improve operations and profitability.

Though the transaction points to bullishness in spectrum valuation across the industry, Citi believes the valuation has something to do with the perceived durability of the lease claims in possible bankruptcy.

At time of writing, Sprint shares were down 1 percent at $6.72.