American Tower Corporation (NYSE:AMT) is the second-largest REIT by market capitalization. It operates over 149,000 communications sites across 22 countries. It generated $2.7 billion in revenue in the third quarter alone, growing 7.7% year over year.

And yet, all three major credit rating agencies rate it at the same level: BBB+.

S&P Global rates American Tower BBB+ with a stable outlook. Fitch rates it BBB+. Moody’s rates it Baa1, the equivalent. That places the company two full rating steps above the investment-grade cliff at BBB-. For a company of this size and market position, the question is not whether the rating is adequate. It is why the rating is not higher.

Where The Leverage Sits

As of September 30, 2025, American Tower’s net leverage ratio stood at 4.9 times net debt to annualized adjusted EBITDA. That is down from 5.1 times at the end of the second quarter. Management noted on the third-quarter earnings call that this represents the lowest leverage among its tower peers.

Total debt stands at approximately $37 billion — among the highest absolute debt loads in the REIT sector. But the context matters. American Tower reported adjusted EBITDA of $1.816 billion for the third quarter, implying an annualized run rate above $7.2 billion. The company also held approximately $10.7 billion in total liquidity, consisting of roughly $2.0 billion in cash and cash equivalents plus $8.7 billion available under revolving credit facilities.

Management described the company’s debt structure as having low floating-rate exposure, meaning most of the debt is locked in at fixed rates. In a higher-rate environment, that limits the near-term impact of refinancing costs on cash flow.

At 4.9 times, the balance sheet is improving. It is not yet conservative.

Why BBB+ And Not A

The rating is not capped by scale. It is capped by leverage discipline.

For large, asset-intensive issuers, moving from BBB+ to A- often requires net leverage sustainably in the mid-4 times area or below, alongside a consistent track record of conservative balance sheet management across cycles. American Tower’s leverage at 4.9 times is trending in the right direction, but it has not yet reached that threshold on a sustained basis.

There are also two ongoing legal matters that add uncertainty to the near-term outlook. An arbitration with AT&T Mexico over disputed tower rents has led the company to reserve approximately $30 million in annual revenue. The hearing is scheduled for August 2026. Separately, American Tower has filed suit against DISH to affirm rent obligations under a long-term contract. DISH remains current on payments as of the third-quarter call.

Neither issue threatens the balance sheet directly. But unresolved legal exposure at the tenant level is the kind of variable that keeps a rating agency from upgrading.

What The Buffer Looks Like

Two rating steps above the cliff means the investor base does not change under normal stress. A downgrade from BBB+ to BBB- would require sustained deterioration across multiple metrics — a sustained move toward the high-5 to 6 times leverage range, liquidity tightening, and revenue visibility declining — all at once. That scenario is not consistent with the current trajectory.

The company’s adjusted EBITDA margin has expanded by approximately 300 basis points since 2020. AFFO per share grew 5.3% year over year in the third quarter, reaching $2.78. Revenue growth is being supported by 5G deployment activity and data center demand through its CoreSite subsidiary, where management highlighted AI-related workloads as a growing driver. The $1.70 quarterly dividend is well covered by current cash flows.

These structural tailwinds provide revenue visibility that most BBB+ rated companies do not have. That visibility is part of why all three rating agencies maintain stable outlooks rather than negative ones.

What The Numbers Show

American Tower carries among the largest debt loads in the REIT sector. It also generates among the largest cash flows. The credit rating reflects the tension between those two facts.

At 4.9 times leverage, the company sits above the range that would typically support an A- rating, yet still well below the level where downgrade risk becomes a structural concern. The glide path is pointed toward deleveraging. Whether it reaches the upgrade threshold will depend on how management balances growth spending against debt reduction over the next several quarters.

For now, all three agencies agree on two things: the buffer above the cliff is real, and the direction is favorable. The distance to the cliff is not in question. The distance to the next upgrade is.

The numbers tell a story. Whether it changes anything — that part is yours.

Disclosure: The author holds no position in AMT at the time of writing.

Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.