Mosaic Solar Loan Trust is returning to the asset-backed securities market to raise $347.2 million. Loans financing residential solar equipment, and extended to borrowers with strong credit, will secure the deal.
Some 10,473 loans are in the portfolio, with an average original loan balance of $43,869 and tenors of five to 25 years, according to Fitch Ratings. The loans are fully amortizing and pay a fixed coupon up to 10.8%, and a WA coupon of 3.8%, according to a pre-sale report from Fitch Ratings.
This Mosaic Solar transaction is the first to include PowerSwitch ZERO loans, which defer principal and interest for the loan term's first 12 or 18 months. Comprising less than 2% of the pool, all of the loans in the current transaction have concluded their deferral period, according to Fitch.
Solar Mosaic is the loan originator, seller, deal sponsor and servicer, while Concord will be the transaction's subservicer, according to Fitch.
Wells Fargo Bank is the collection account bank on the deal, Fitch said, although it was unclear at press time which institution would serve as lead underwriter. As for previous transactions, Mitsubishi UFJ Securities and Société Général, were lead managers on the Mosaic Loan Trust 2023-2 deal, according to the Asset Securitization Report's deal database.
The collateral has a number of positive characteristics, from a credit standpoint. While the loans had a WA FICO score that was 758, just one point above the FICO score in the 2023-1 deal, the WA interest rate was 3.3%, compared with the 2.3% rate in the 2023-1, plus pre-permission to operate (PTO) loans account for 8% of the pool, versus 5% in the previous transaction.
Solar equipment confers strong loan recovery incentives to the underlying loans, according to Fitch. Photovoltaic equipment is likely to reduce homeowners' utility bills when compared with long-term energy price inflation, and because the lender can remotely disconnect the system on charged-off accounts.
All of the fixed-rate notes have a legal final maturity of September 2053, according to Fitch, which intends to assign ratings of 'AA-' to the class A notes; 'A-' to the class B notes; 'BBB-' to the class C notes; and 'BB-' to the class D notes.
