Enpal made its long anticipated return to the ABS fray last week, with a deal that was a big step forward for the residential renewables ABS market.
First off, the deal’s structure was cleaner: gone were the protected orders and EIF guarantee of the lender’s debut. M&G, Enpal’s long-time backer, is sponsoring it by taking down the residual notes with call rights and a zero-coupon class ‘F’ tranche.
But more significantly, the deal was the first to include heat pump loans alongside solar exposures.
The struggle with European solar ABS has always been building a portfolio large enough to access a public market fragmented by lender, product type, country and structures. Doing inter-jurisdictional deals is always tricky, and it took some time to settle on a loan product being optimal for securitization rather than a lease.
Adding heat pumps (and, possibly in future, other kinds of home renewables) into the mix means a few changes to the pool’s characteristics (which GlobalCapital has covered), but it gives the portfolio more scale and has eases the path for more issuance.
While Enpal is a tough act to follow, if investors become comfortable with a mix of collateral, it could lead to there being more than one European solar ABS issuer.
There are already promising signs from several other issuers, particularly in the UK, where HomeTree, Homeserve and Sunsave are among those with open warehouse lines.
