Sunrun’s Major Securitization in the Clean Energy Sector
Sunrun, a prominent player in the clean energy industry, has recently gained attention for finalizing a significant $365 million securitization of leases and power purchase agreements tied to residential solar and battery systems. This achievement marks an important milestone for the company, being its twelfth securitization since the company started in 2015 and the third one issued this year.
Capital Market Strategy and Performance
Discussing the company’s strategy, Danny Abajian, Sunrun’s Chief Financial Officer, expressed strong confidence in their ongoing efforts in the capital markets. "Our latest securitization highlights our industry-leading cost of capital. It represents the solid relationships we maintain in capital markets and the quality of our assets," he noted. Abajian's remarks underscore Sunrun’s standing as a trusted originator and servicer in the solar industry.
Details of the Securitization Structure
The recent securitization transaction features a carefully crafted structure comprised of different classes of notes. This includes two publicly placed A+ rated note classes — Class A-1 and Class A-2 — along with a single class of BB rated notes known as Class B, which will be retained by Sunrun. The marketing of Class A notes received a notable amount of interest, leading to an oversubscription for both classes.
Investors can look at the Class A-1 notes, which are priced at $75 million and offer a coupon of 5.49%. In addition, the Class A-2 notes, amounting to $290.4 million, carry a coupon of 5.88%. The pricing is appealing, as the Class A-1 notes yield 5.538%, while the Class A-2 notes yield 5.933%. Furthermore, the calculated advance rate for these classes impressively stands at 73.8%, based on a 6% discount rate.
Asset Backing and Operational Impact
This transaction is backed by a diverse portfolio of 21,281 solar systems operating across 19 states and Puerto Rico, covering 73 utility service areas. This varied asset base highlights Sunrun’s solid market position, and customer reliability is further emphasized by a weighted average FICO score of 741 among their customer base.
The anticipated closing date for this securitization is approaching soon, which will help Sunrun strengthen its financial position in the competitive clean energy landscape.
Future Financing Plans and Outlook
In line with their established practices from past transactions, Sunrun plans to raise additional subordinate, non-recourse financing. This will be partly backed by distributions from the retained Class B notes and is aimed at enhancing Sunrun's cumulative advance rate. These strategic financial maneuvers demonstrate the company’s flexibility in a constantly evolving market.
Involvement of Investment Banking Partners
Through key partnerships with financial institutions, RBC Capital Markets served as the primary structuring agent. Additionally, major financial players like BofA Securities, Citigroup, Deutsche Bank Securities, and J.P. Morgan played pivotal roles in the bookrunning process. KeyBanc Capital Markets also contributed as a co-manager for this securitization effort.
About Sunrun and Its Mission
Since its founding in 2007, Sunrun Inc. (Nasdaq: RUN) has been a leader in the transition to renewable energy, working to eliminate financial barriers and provide accessible, locally produced energy solutions. As a trailblazer in the residential solar market, Sunrun is dedicated to ensuring energy security, cost predictability, and peace of mind for its customers. By linking homes to renewable energy sources, Sunrun delivers significant community benefits and enhances value for its customer base. For more information about their offerings, you can check directly with Sunrun.
Frequently Asked Questions
What is the purpose of Sunrun's recent securitization?
The recent securitization is intended to raise capital through lease and power purchase agreements for residential solar and battery systems.
How many systems are backing the Class A notes?
The Class A notes are supported by a diverse portfolio of 21,281 solar systems located across several states and territories.
What are the coupon rates for the Class A-1 and Class A-2 notes?
The coupon rate for the Class A-1 notes is 5.49%, while the Class A-2 notes have a coupon rate of 5.88%.
Who were the key players involved in this securitization?
Key players in this securitization included RBC Capital Markets, BofA Securities, Citigroup, Deutsche Bank Securities, J.P. Morgan, and KeyBanc Capital Markets as a co-manager.
What is Sunrun's mission as a company?
Sunrun aims to make renewable energy accessible by offering innovative solar solutions, with a focus on energy security and sustainability across homes nationwide.
