Sunrun Armetis Issuer is preparing to sell almost $1 billion in asset-backed securities, secured by revenues from a pool of solar leases, power purchase agreements and other customer agreements.
Sunrun Inc., the sponsor, issues notes through a number of securitization programs named after classic deities, including Demeter, Iris and Neptune. The Artemis 2024-1 notes all have the same anticipated repayment date, July 2031 and a July 2059 final maturity date, according to ratings analysts from the Kroll Bond Rating Agency.
As for the current deal, $977.5 million in notes will be issued from three tranches of class A and B certificates. Classes A1 and A2 are rated A+, while the class B notes receive BB ratings, KBRA said.
The rating agency notes that 48,628 leases and power purchase agreements tied to residential solar photovoltaic (PV) installations—some of which store energy—provide collateral for the notes, the rating agency said. The rating agency noted that two different project companies own the PV systems in the deal, Sunrun Juno Owner 2023, and Sunrun Ragnar Owner 2023-B, the rating agency said.
Atlas SP Securities, a division of Apollo Global Securities is the deal's structuring agent, KBRA said.
Assets underpinning the Sunrun Artemis portfolio is more heavily concentrated in California, Puerto Rico and Massachusetts, areas that account for about 58.5% of the number of PV systems and about 66.0% of the aggregate discounted solar asset balance (ADSAB), according to KBRA. The portfolio consists of about 75.8% PPA agreements and 24% lease agreements, when measured by customer contracts with monthly payments, and about 66.8% in PPA agreements and 33.2% in lease agreements by contract count, KBRA said.
Prime obligors, whose FICO scores are a weighted average (WA) 741, is one of several positive credit attributes to the deal, KBRA said.
The structure calls for cash flow to the portfolio to come from a net of operating and maintenance expenses, overcollateralization of about 8.9% of the note principal, and class B note subordination that provides an additional 8.50% credit enhancement to the class A notes, KBRA said. The rating agency also noted that three reserve accounts help shore up credit to the notes – a liquidity, a class B liquidity reserve account and a supplemental reserve account.
