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[atomic] Cloud init fails to install packages on Atomic Host



I am using the latest image: http://cloud.centos.org/centos/7/atomic/images/CentOS-Atomic-Host-7-GenericCloud.qcow2.gz

My user-data contains 
package_upgrade: true

packages:
 - zsh
 - git
 - wget
 - vim-enhanced

Upon boot up, I see error messages on the log:
Feb  9 00:44:33 localhost cloud-init: 2017-02-09 00:44:33,187 - util.py[WARNING]: Package update failed
Feb  9 00:44:33 localhost cloud-init: 2017-02-09 00:44:33,191 - util.py[WARNING]: Package upgrade failed
Feb  9 00:44:33 localhost cloud-init: 2017-02-09 00:44:33,194 - util.py[WARNING]: Failed to install packages: ['zsh', 'git', 'wget', 'vim-enhanced']
Feb  9 00:44:33 localhost cloud-init: 2017-02-09 00:44:33,195 - cc_package_update_upgrade_install.py[WARNING]: 3 failed with exceptions, re-raising the last one
Feb  9 00:44:33 localhost cloud-init: 2017-02-09 00:44:33,195 - util.py[WARNING]: Running package-update-upgrade-install (<module 'cloudinit.config.cc_package_update_upgrade_install' from '/usr/lib/python2.7/site-packages/cloudinit/config/cc_package_update_upgrade_install.py'>) failed
Feb  9 00:44:33 localhost cloud-init: Cloud-init v. 0.7.5 running 'modules:final' at Thu, 09 Feb 2017 00:44:33 +0000. Up 9.93 seconds.

Has anyone encountered this issue?  Other directives on my user-data works fine.

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