Sunrun, the public company that originates, aggregates and services residential solar contracts, such as leases and power purchase agreements (PPAs) is preparing to sell $293 million in asset-backed securities.
Sunrun Quintus Issuer 2026-2, the transaction, is the company's eighteenth public securitization, and is backed by a pool of 37,595 leases and PPAs involving PV installations extended to prime borrowers, according to analysts at Kroll Bond Rating Agency.
As of the June 30 cutoff date, the total aggregate discounted solar asset balance (ADSAB), was about $385.7 million, calculated with a 6% discount rate. Using a 7.5% discount rate, the ADSAB was $359.7 million, KBRA said.
Sunrun will issue the notes through two tranches of class A and class B notes, with the former issuing the bulk of notes, $267 million, according to the rating agency. The notes have an optional repayment date of July 2035, and a final maturity date of January 2054. In the class A notes, there are advance rates of 69.2% and 74.2% for the PV 6.0 and PV 7.5, respectively.
Interest on the notes will be repaid sequentially. Scheduled principal, meanwhile, will be paid based on the scheduled outstanding note balance for the applicable payment period and the outstanding balance on each class of notes, KBRA said.
KBRA assigns ratings of A- and BB- to classes A and B, respectively.
In total, the solar assets have a discounted asset balance of $359.6 million, and an average discounted solar balance of $9,069. On average the PV system size, by megawatt DC is 254.36, the rating agency said.
Sunrun 2026-2's structural features include overcollateralization of about 18.54%, calculated as an excess of the ADSAB over the note principal.
The class B notes provide an additional 7.23% credit enhancement to the class A notes. Sunrun 2026-2 also benefits from a liquidity reserve account, funded to its required amount equal to six months of interest on the class A notes, KBRA said.
California, Maryland and New Jersey represent a combined 64.7% of the PV systems in the pool, and about 63.2% of ADSAB, the rating agency said. Meanwhile, on a weighted average (WA) basis the original and remaining tenor of the PPAs and leases is 240 months and 126 months, respectively. Also on a WA basis, the underlying borrowers have a FICO score of 756, the rating agency said.
