Palmetto HASI Holdings is preparing to sponsor a $430 million securitization of leases and power purchase agreements (PPAs) connected to residential solar photovoltaic systems, including energy storage equipment.
Just one tranche will be issued from the Sabal Issuer 2026-1, which is slated to close on February 27, according to Kroll Bond Rating Agency. The deal has an anticipated repayment date of November 2032, and final maturity date of May 2061, and the tranche gets an A- rating from KBRA.
Deutsche Bank Securities is the sole structuring agent on the deal.
About 30.1% of the PV systems in the current deal have storage units, higher than 28.3% on the Sabal 2025-2 deal, the rating agency said. But the pool has another collateral change, KBRA said, where the concentration of contracts in groups with lower FICO scores is slightly higher. That is likely a result of the rating agency's finding that Sabal 2026-1's weighted average (WA) FICO score of 751, is lower than the 757 seen on the Sabal 2025-2.
The FICO shift did not appear to dilute the overall credit quality of borrowers, however, as customers with a FICO of at least 700 accounted for about 75.3% of the PV systems by the aggregate discounted solar asset balance (ADSAB).
The single tranche has an advance rate of 69.5% and 81.7% on the PV 6.0 and PV 7.5, respectively, KBRA said.
Sabal 2026-1's capital structure boosts credit and preserves cash flow to the notes through several layers of credit enhancement. Overcollateralization amounts to 18.3% of the note principal, a liquidity reserve, supplemental reserve and GP Sabal Resignation Reserve account, the rating agency said.
Funds in the last account will be used to cover payments that might be required if the purchase option or the resignation option is exercised related to the GP Sabal Project, according to KBRA.
Antillean Solar 3, Bermuda Sabal 2 and P Sabal are the project companies that own the PV systems, and they are all also the managing members, KBRA said.
Despite the high quality of borrowers, the geography concentration of those borrowers poses a potential risk. Three states–California, Florida and Arizona– account for 51% of the obligors ADSAB, KBRA said. By the number of obligors, Florida accounts for about 19.5% of the pool, the rating agency said.
