Sunrun prices $230M senior securitization of solar, battery systems

Sunrun has priced a securitization of leases and power purchase agreements. The securitized leases and power purchase agreements have been in service for an average of 6.75 years, and thus the vast majority of the portfolio is after the ‘flip point’ in tax equity structures. The securitization was issued with a single class of notes that are A rated by Kroll with a principal amount of $230 million, a weighted average life of 7 years and final maturity of February 1, 2055. As the portfolio has a remaining contractual life of 13.25 years and the vast majority of the portfolio has already reached the tax equity fund ‘flip point’, the structure was issued without an Anticipated Repayment Date and instead fully amortizes over the contractual life at a fixed interest rate. The initial balance of the notes represents an approximate 85% advance rate on Securitization Share of ADSAB. The advance rate is 7 percentage points higher than the senior tranche in Sunrun’s prior securitization of more recently originated assets. The notes were priced at a 6.27% coupon and represented a 6.328% yield. The coupon rate reflects a spread of 195 basis points over the benchmark swap rate at the time. The notes are backed by a diversified portfolio of 27,094 solar rooftop systems distributed across 19 states and Washington D.C. and 65 utility service territories. The weighted average customer FICO score is 739. The transaction is expected to close by April 17, 2024. The portfolio is jointly owned by National Grid and Sunrun, with NG receiving the majority of cash flows through 2042. Bank of America was the sole structuring agent and served as joint bookrunner along with Truist and KeyBanc.