Residential solar developer Sunrun priced its second ever securitization on Dec. 12, Sunrun 2018-1, a $378.5 million offering backed by leases and power purchase agreements tied to rooftop solar systems.
The San Francisco-based company only offered one of the deal’s two tranches to investors. It sold the $322 million senior class ‘A’ bonds at 265 basis points over interpolated swaps. The $56.5 million junior ‘B’ tranche was not offered.
Credit Suisse, Deutsche Bank and Keybanc Capital Markets were the bookrunners.
Kroll Bond Rating Agency assigned a rating of A- to the senior notes, while the subordinate bonds were unrated.
The pricing for the class ‘A’ tranche was 35 bp wide of where Sunrun sold the equivalent tranche of bonds from its first deal in 2015. That is mostly a function of a decrease in the competitiveness of capital markets financing for solar finance companies, say solar ABS deal watchers.
Market observers say that other sources of funding including bank loans and asset sales have become more attractive as fixed-income markets have softened this year in response to a host of concerns, both macroeconomic and securitization-specific.
Nevertheless, the last stretch of 2018 was markedly upbeat for issuance of solar ABS. In addition to Sunrun, deals from real estate investment trust Hannon Armstrong and Dividend Solar were priced in the last six weeks, totaling nearly $1 billion. Solar ABS deal count for the year stands at nine.