Citi and Renew Financial said Monday that they recently closed the first ever asset-backed security transaction comprised of unsecured consumer energy efficiency loans.
The transaction in which Renew Financial and Citi issued $12.58 million in securities creates a new asset class in the form of ABS backed by pools of residential energy efficiency loans. Citi and Renew Financial expect to execute additional transactions over the next several years, firmly establishing a secondary market for these loans to make more capital available for homeowners to fund energy efficiency improvements to their homes. Calvert Investment Management, Inc. purchased the entire issuance.
The deal represents the first securitization transaction from the Warehouse for Energy Efficiency Loans (WHEEL). Announced last year, WHEEL is an innovative public-private partnership to create a national financing platform to bring low-cost, large-scale capital to government and utility-sponsored residential energy efficiency loan programs
WHEEL is a collaboration among national leaders in finance and energy, including Citi, Renew Financial, Pennsylvania Treasury, the National Association of State Energy Officials, Energy Programs Consortium and a growing number of states and utilities. Pennsylvania, Kentucky and the Greater Cincinnati Energy Alliance have all joined WHEEL, and numerous additional states are expected to join soon.
Through the program, homeowners can borrow up to $20,000 at very competitive rates to make a range of improvements to their homes, such as HVAC equipment, water heaters, roofing, insulation, windows and energy efficient appliances.
“Thanks to this timely partnership with Citi, millions of homeowners across the country will be able to make crucial energy efficiency improvements to their homes,” said Renew Financial CEO Cisco DeVries. “We are pleased to see this important partnership of leading finance and government agencies take root, as it will provide states and local jurisdictions financing to help homeowners reduce their energy use and utility bills.”