The New York State Energy Research and Development Authority is issuing a new round of green revenue bonds totaling $18.5 million to finance local residential solar-panel installations.

The Series 2018A bonds is the fifth securitization since the authority began offering the loans through a Wisconsin-based lender in 2014. The transaction features seven classes of serial bonds totaling $9.1 million with maturities ranging from 2020 to 2026, and a $9.4 million bond due in 2034.

All of the notes carry a single-A rating from Kroll Bond Rating Agency, and have 28.9% of credit enhancement from the initial pool of about $25 million in loans. The enhancement includes overcollateralization as well as a 1.45% reserve account.

The NYSERDA bonds’ cash flow will be derived from monthly loan payments from 1,558 borrowers in Nassau, Suffolk and Westchester counties, a majority of whom are repaying the loans through local utility bills or direct-draft recurring automate clearinghouse payments.

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The loans are used to finance grid-connected solar electric systems through the state’s NY-Sun Incentive Program, a statewide initiative with a goal of installing 3,000 megawatts of solar-panel projects by 2023. NY-Sun oversees the third-party contractors in charge of residential installations.

The average loan size is $15,473 for owners of one-to-four-family residential homes, with a weighted average pool FICO of 754 on the five-,10- and 15-year loans. The borrowers in the pool have a maximum 50% debt-to-income ratio, no bankruptcies, foreclosures or repossessions within the past seven years nor any outstanding collections, tax liens or judgments over $2,500.

The transaction includes prefunding feature that will tack on up additional solar loans through June 30 that will add to the pool another $500,000, or up to 2.7% of the principal balance of the notes at closing.

The loans are underwritten by Energy Finance Solutions in Madison, Wis., which has been originating solar loans for the authority since the second quarter of 2014. The loans are serviced by a third party, Concord Servicing Corp., which receives the on-bill recovery payments from participating utilities through which the borrower pays a monthly electric and gas bill.

The bonds in the 2018-A series are not guaranteed by the authority and are non-recourse. KBRA has assigned a base-case loss range between 4.6%-6.6%.

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