Sunrun Prizes Securitization of solar energy and residential batteries
Transaction sets new records, with record deviations from benchmarks and senior tranche yield of 2.28%
Securitization provides the highest advance rates compared to the value of the underlying collateral asset in the history of the company
SAN FRANCISCO, September 22, 2021 (GLOBE NEWSWIRE) – Sunrun (Nasdaq: RUN), the leading national solar services, battery storage and energy company, today announced that it has priced a securitization of leases and power purchase contracts, known as Sunrun’s Solar As a Service Offering.
“The market increasingly recognizes the high quality of residential solar assets and our peak performance,” said Ed Fenster, Co-Founder and Co-Executive Chairman of Sunrun. “Fourteen years of solid performance, especially during the financial crisis and the Covid, have enabled us to continue reducing investment costs and increasing advance rates. In this transaction, we achieved a lower weighted average cost of capital than any previous transaction. “
Although the transaction was structured with notes rated A- (“Class A”) and BB- (“Class B”), only the class A notes were sold to investors. The Class A Notes have an initial balance of $ 447.1 million and have been valued at a yield of 2.28%, which represents a difference from the benchmark swap rate of 120 basis points. This represents a 15 basis point spread improvement over the securitization issued by Sunrun in March 2021, which previously represented the lowest spread reached by Sunrun or Vivint Solar since its inception to date. Class A notes represent a prepayment rate of approximately 75% of the securitization portion of the aggregate discounted balance of solar assets (i.e. contractual cash flows available for debt service) in using a 5% discount rate. With a yield of 2.28%, the cost of debt for the Class A notes is approximately 160 basis points lower than the average cost of all of the Company’s securitized notes. The Class A Notes have an expected weighted average life of 6.3 years, an expected repayment date of January 30, 2029 and a final maturity date of January 30, 2057.
As expected when initiating the securitization process, a subsidiary of Sunrun will hold the Class B Notes. Sunrun is considering entering into additional subordinated financing (secured, in part, by distributions of the Class B Notes) after the close of the securitization transaction, which would further increase the cumulative advance rate obtained by Sunrun with respect to the assets within the fund subsidiary.
The ratings are backed by a diverse portfolio of 34,068 rooftop solar systems across 23 states and territories and 74 utility territories. The client’s weighted average FICO score is 747. The transaction is expected to close on September 29, 2021.
This is the first securitization transaction concluded by Sunrun where the advance rate is calculated using a 5% discount rate. Using a 6% discount rate, consistent with previous transactions, the Class A advance rate is greater than 82%.
Deutsche Bank Securities was the sole structuring agent and acted as associate bookrunner with Credit Suisse and BofA Securities. Truist Securities, KeyBanc Capital Markets, RBC Capital Markets and Citigroup were co-managers of the securitization.
This press release does not constitute an offer to sell or the solicitation of an offer to buy and there will be no sale of such securities in any jurisdiction in which such an offer, solicitation or sale would be illegal prior to the registration or qualification under securities laws. of such jurisdiction.
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