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Sunrun Prices its 1st Solar Deal Wide of SolarCity

Solar developer Sunrun has priced its first-ever securitization.

The deal, Sunrun Callisto Issuer 2015-1, sold a total of $111 million of notes payable from the cash flow generated by a portfolio of residential solar energy systems and related customer agreements.

The $100 million senior tranche of class A notes are rated 'A' by Kroll Bond Rating Agency and pay 4.4% a year; an $11 million subordinate tranche of class B notes are rated 'BBB' and pay 5.38%.

All of the notes will have an anticipated repayment date of July 22, 2024.

By comparison, the senior notes issued by SolarCity’s most recent deal, completed a year ago, are rated a notch lower, at BBB+, by Standard & Poor’s, yet pay a lower interest rate of 4.026%. SolarCity’s notes have a weighted average life of 6.89 years.

Both deals are backed by what are known as “inverted leases,” one of several different kinds of arrangements that allow developers to pass along tax credits to investors in their projects.

 In SunRun Callisto’s case, by 7,893 photovoltaic residential solar installations and related contracts; some 68% of these contracts are power purchase agreements; the remaining 32% are lease agreements. Payments are made under a master lease transaction in which Sunrun Callisto is the lessor and receives fixed rent payments which are then passed on to note holders.

Credit Suisse was the lead manager of the deal, which is expected to close July 9, 2015.

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