In its second deal of 2023, Sunnova Energy plans to sell $242.7 million in asset-backed securities (ABS), secured by residential solar loans. Some $45 million of the loans will be prefunded at closing.
Some $400.4 million in residential loans will secure the collateral pool, virtually all of which, 99.2%, were originated on 25-year terms, according to ratings analysts from Kroll Bond Rating Agency. The photovoltaic systems in some cases include energy storage batteries, according to the Asset Securitization Report's deal database. In some cases the loans have energy storage batteries and a small portion of the pool includes battery-only loans extended to prime borrowers, the ASR database said.
At the transaction's cutoff date, the collateral loans had an average current balance of $51,174, a weighted average (WA) remaining term of 296 months, and WA current interest rate of 2.43%, according to KBRA. The deal is expected to close on August 30, according to the ASR database.
RBC Capital Markets and SMBC Nikko Securities are managers on the deal, the ASR database said. Zions Capital partners is also on the deal as an initial note purchaser, according to KBRA. All notes are expected to be benchmarked over the three-month interpolated yield curve, where the classes A, B and C notes will price at 215, 325 and 575 basis points over the I-Curve. The notes also have an average life of just under four years, according to the database.
Sunnova's experience as an originator and servicer of solar residential loans counts as a potential credit strength, according to KBRA. After beginning operating in the residential market in January 2013, Sunnova had developed a broad network of more than 1,500 active dealers and sub-dealers, and delivers renewable energy resources to more than 348,000 customers across more than 45 U.S. states and territories, KBRA said. Also, the company applies a minimum FICO of 600, and on a WA basis borrowers had a FICO of 745.
KBRA and Fitch Ratings both expect to assign ratings of 'AA-' to the class A notes; 'A-' to the class B notes and 'BBB' to the class C notes.
