Sunrun, which installs and services residential solar equipment, and originates the financing for them, is preparing to bring $695 million in asset-backed securities to the market, secured by revenue from a pool of leases and power purchase agreements (PPAs).
The deal, Sunrun Bacchus Issuer 2025-1, will issue the debt through four tranches of class A and B notes, according to Kroll Bond Rating Agency. All the notes have a final maturity date of April 2060.
Sunrun Bacchus' structure benefits from a multiple layers of credit enhancement including overcollateralization, subordination of 8% provided from the class B notes, a liquidity reserve account, a supplemental reserve account, tax loss proceeds account and excess cash flows.
Initial hard credit enhancement, based on a Pv6 securitization share of ADSAB is 27.8%, higher than the 18.7% on the Sunrun 2024-3 transaction, KBRA said.
KBRA points out that Sunrun has incurred operating net losses since inception, with a $84 million net loss as of Q3 2024, down from $1,069 million at the end of Q3 2023.
Interest is paid sequentially, and scheduled principal will be paid to the A1 notes, based on the scheduled outstanding note balance for the applicable payment period and the outstanding balance of each class of notes. If there is an early amortization period or a sequential interest amortization period, or on any date following the ARD, all remaining funds will be paid to the class A1 notes, then the A2 notes pro rata until the outstanding note balance of the class A notes is reduced to zero. After that, payments flow to the class B notes.
Two project companies, Sunrun Boreas Owner 2023 and Bacchus Owner 2025, own the solar panel systems. Monthly lease customers pay a fee that covers the cost of leasing the panels and a guarantee of electricity production. PPA customers purchase electricity for either a fixed fee per kilowatt hour or a fixed monthly fee.
KBRA assigns ratings of A to the A1 through A2B notes, and BB to the class B notes.
