SolarCity, the largest residential solar developer in the U.S., has priced another securitization.

The deal, for $123.5 million, is backed by leases and power purchase agreements between the company and homeowners using its solar panels.

With an expected maturity of 6.5 years, the $103.3 million in A notes of the 2015-1 series pays 4.18%, according to a release from the company.

This was inside the 4.4% yield on a $100-million senior tranche in Sunrun’s debut solar securitization, which closed last July, but it was wide to the 4.026% on the senior notes of SolarCity’s 2014-2, which priced in July of 2014.

In addition, ratings on the more recent SolarCity notes were higher, although different agencies were involved. The 2015-1 senior tranche received an ‘A’ from Kroll Bond Ratings, while the 2014-2 senior tranche got a ‘BBB+,’ from Standard & Poor’s.  

The $20 million in subordinated notes of 2015-1 priced at 5.58%. The entire deal has expected maturity of February 21, 2022.

Solar projects are partially financed with a 30% investment tax credit (ITC), which is typically transferred from a developer facing low or no tax liability to companies with a steep tax bill. 

A solar developer and its tax equity investors can choose among arrangements designed to ensure the transfer is legally sound. Any securitiation of solar assets funded through these arrangements has to deal with them in its structure. 

SolarCity’s 2015-1 tackled the ITC in a way that’s a departure from previous deals in this asset class, by Sunrun, as well as from SolarCity’s prior deal completed in July 2014. 

Here's more on how the developer did it.

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