Sunrun Closes Securitization Of Residential Solar And Battery Systems

Written By: Jen Neville
January 3, 2019

residential solar lease securitization

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Sunrun, a leader in residential solar, storage and energy services company announced it had completed its second securitization of leases and power purchase agreements, known as Sunrun’s solar-as-a-service. Historically, Sunrun had mostly been active in the commercial bank market, where it has closed over $1.2 billion in capital commitments, for its non-recourse financings.

“We are pleased to continue to expand the set of investors in residential solar assets to enable Sunrun to bring affordable solar energy to more households,” stated Edward Fenster, Sunrun’s co-founder and executive chairman. “The closing of this asset-backed securities transaction continues to demonstrate a deepening pool of capital available to Sunrun at attractive costs. The combination of ABS with other project-level financing positions Sunrun well to generate cash and accelerate our pace of solar installations.”

The securitization includes A- rated Class A notes in the amount of $322 million with a weighted average life of 9.57 years and final maturity of April 30, 2049. This is the first residential solar lease securitization that is fully amortizing without an earlier soft maturity, or “Anticipated Repayment Date.” The notes could be called by Sunrun at a 1% premium beginning July 30, 2024, and without any call premium beginning January 30, 2026. The notes claim to be backed by a diverse portfolio of 34,493 solar rooftop systems distributed across 19 states and 66 utility service territories.

The Class A notes initial balance represents a 72.3% advance rate relative to the aggregate discounted solar asset balance. The Class A notes were priced at a 5.55% yield with a 5.31% fixed coupon, reflecting a spread of 265 basis points over the benchmark swap rate at the time, providing a lower overall cost of capital over swap rates than Sunrun’s average.

Credit Suisse and Deutsche Bank Securities acted as co-structuring agents, and Credit Suisse, Deutsche Bank Securities and KeyBanc Capital Markets acted as joint bookrunners.

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