Revenue from repayments on loans financing residential solar panels, originated by Sunrun will support $230 million in asset-backed securities from the Sunrun Neptune Issuer 2024-1 transaction, in a deal expected to close by the end of the month.
Sunrun extends financing through five different project companies, all related entities, that take shape as solar panel loans, cash sales, leases or solar power purchase agreements (PPAs), according to Kroll Bond Rating Agency. The five project companies—Sunrun Neptune, Ulysses, Ragnar, Ursa and Utu owners—have contributed highly seasoned assets to a pool of 27,094 assets, and will have a managing member interest at closing, KBRA said.
Sunrun 2024-1 finalized the list of assets on Nov. 30, 2023, the rating agency said, which had a total aggregate balance of $277.7 million.
While Sunrun began offering these lines of financing in 2007, KBRA noted that the portfolio does not have any meaningful originations that have completed a full repayment cycle. That makes the company's performance data thin, the rating agency said. Also residential solar financing is a relatively new asset class that continues to evolve. Despite these traits creating limited performance issues, performance data has been in line with KBRA's expectations, it said.
Cashflow to the securitization portfolio subtracts expenses related to operations and maintenance expenses, administrative and insurance, and any distributions to the tax equity investor. The notes also benefit from overcollateralization, a liquidity reserve account, supplemental reserve account and the Ragnar 2015 purchase option reserve account, the KBRA said.
Computershare Trust is on the deal as backup servicer, supporting each project company that will service their respective underlying assets, which are already off to a strong start. The PV Systems' underlying customers have a weighted average (WA) FICO score of 739, and customers with scores greater than 700 represent a majority (73.0%) of the photovoltaic (PV) systems by aggregate discounted solar asset balance (ADSAB).
