Sunrun Prices Record Setting $886.3 million Senior Securitization of Residential Solar and Battery Systems

Rhea-AI Summary

Sunrun (Nasdaq: RUN), the top provider of clean energy as a subscription service in the U.S., announced its largest securitization ever, worth $886.3 million. This marks the biggest residential solar securitization industry wide. The transaction includes two pari passu tranches of A+ rated notes and a single class of BB rated notes. The $443.15 million Class A-1 notes were marketed publicly and bear a 6.25% coupon with a 6.385% yield. The Class A notes advance rate stands at 72.6%. The diversified portfolio backing the notes includes 48,628 systems across 19 states, Washington D.C., and Puerto Rico. The transaction is set to close by June 11, 2024, with several prominent financial institutions involved as structuring agents and bookrunners.

Positive

• Record setting $886.3 million securitization, the largest in Sunrun's history and the residential solar industry.
• Class A-1 notes priced with an improved spread of 205bps, reflecting a 35bps improvement from September 2023.
• The weighted average customer FICO score of 741 indicates a high-quality customer base.
• The securitization is backed by a diversified portfolio of 48,628 systems across 19 states and other territories.
• Sunrun's proven track record recognized by KBRA, resulting in a higher rating for comparable advance rates.
• Involvement of major financial institutions like J.P. Morgan, Morgan Stanley, and RBC Capital Markets signals strong financial backing.

Negative

• The Class A notes bear a relatively high coupon rate of 6.25%, which might increase financing costs.
• The expected weighted average life of 6.8 years and a final maturity date in 2059 could indicate long-term financial commitments.
• The anticipated additional subordinated subsidiary-level non-recourse financing could imply added financial complexity and risk.
• A spread of 205bps, while improved, still represents a significant cost over the benchmark rate.

SAN FRANCISCO, June 04, 2024 (GLOBE NEWSWIRE) -- Sunrun (Nasdaq: RUN), the nation’s leading provider of clean energy as a subscription service, today announced it has priced a securitization of leases and power purchase agreements. The securitization represents the largest in Sunrun’s history and the largest residential solar securitization industry wide.

“Sunrun continues to set industry benchmarks, with our robust performance and ability to attract competitively priced capital,” said Danny Abajian, Sunrun’s Chief Financial Officer. “Not only was this the largest securitization for Sunrun and the industry, our proven track record as an originator and servicer has been recognized by KBRA, assigning a higher rating for comparable advance rates relative to precedent ABS transactions.”

The transaction was structured with two pari passu tranches of A+ rated notes (the “Class A-1” and “Class A-2”, respectively and together the “Class A”) and a single class of BB (“Class B”) rated notes. The $443.15mm Class A-1 notes were marketed in a public asset backed securitization, whereas the $443.15mm Class A-2 notes were privately placed. The Class A notes were priced with a coupon of 6.25%. The Class A-1 notes pricing reflects a 205bps spread and a 6.385% yield. The spread of 205bps represents an improvement of 35bps from Sunrun’s 2023-2 asset backed securitization in September 2023. The initial balance of the Class A notes represents an 72.6% advance rate on the Securitization Share of ADSAB (present value using a 6% discount rate). The Class A notes have an expected weighted average life of 6.8 years, an Anticipated Repayment Date of July 30, 2031, and a final maturity date of July 30, 2059. Similar to prior transactions, Sunrun anticipates raising additional subordinated subsidiary-level non-recourse financing (secured, in part, by the distributions from the retained Class B notes), which is expected to increase the cumulative advance rate obtained by Sunrun.

The notes are backed by a diversified portfolio of 48,628 systems distributed across 19 states, and Washington D.C. and Puerto Rico and 79 utility service territories. The weighted average customer FICO score is 741. The transaction is expected to close by June 11, 2024.

ATLAS SP Securities was the sole structuring agent and served as joint bookrunner along with J.P. Morgan Securities, Morgan Stanley & Co., MUFG Securities Americas, and RBC Capital Markets. Citigroup Global Markets and KeyBanc Capital Markets served as co-managers for the securitization.

This press release does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.

Investor & Analyst Contact:
Patrick Jobin
Investor Relations Officer
investors@sunrun.com

Media Contact:
Wyatt Semanek
Director, Corporate Communications
press@sunrun.com

About Sunrun

Sunrun Inc. (Nasdaq: RUN) revolutionized the solar industry in 2007 by removing financial barriers and democratizing access to locally-generated, renewable energy. Today, Sunrun is the nation’s leading provider of clean energy as a subscription service, offering residential solar and storage with no upfront costs. Sunrun’s innovative products and solutions can connect homes to the cleanest energy on earth, providing them with energy security, predictability, and peace of mind. Sunrun also manages energy services that benefit communities, utilities, and the electric grid while enhancing customer value. Discover more at www.sunrun.com.

FAQ

What is the value of Sunrun's latest securitization?

Sunrun's latest securitization is valued at $886.3 million, the largest in the company's history and the residential solar industry.

When is Sunrun's $886.3 million securitization expected to close?

The transaction is expected to close by June 11, 2024.

What is the coupon rate of Sunrun's Class A-1 notes in its latest securitization?

The Class A-1 notes were priced with a coupon rate of 6.25%.

How many systems back Sunrun's latest securitization?

The securitization is backed by a portfolio of 48,628 systems.

Which financial institutions are involved in Sunrun's $886.3 million securitization?

ATLAS SP Securities, J.P. Morgan Securities, Morgan Stanley & Co., MUFG Securities Americas, RBC Capital Markets, Citigroup Global Markets, and KeyBanc Capital Markets are involved.

What is the weighted average customer FICO score for Sunrun's securitization?

The weighted average customer FICO score is 741.

What is the expected weighted average life of Sunrun's Class A notes?

The expected weighted average life of the Class A notes is 6.8 years.

What rating did KBRA assign to Sunrun's Class A notes?

KBRA assigned an A+ rating to Sunrun's Class A notes.

What is the advance rate on the Securitization Share of ADSAB for Sunrun's Class A notes?

The advance rate on the Securitization Share of ADSAB for Sunrun's Class A notes is 72.6%.