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Sunnova, Hannon Armstrong light up solar ABS


A deal from solar finance company Sunnova that was priced at the end of last week and a first time solar securitization from Hannon Armstrong, announced on Monday, are rekindling the market for solar ABS in the fourth quarter.

Houston-based Sunnova sold its $262.7m deal, SNVA 2018-1, on October 26. It was the company’s second outing in the securitization market, following an April 2017 issuance.

The issuer priced the senior bonds of the deal tighter than those of its first trade, selling the $202m ‘A’ notes at 175bp over interpolated swaps, for a yield of 4.874%, compared with 4.95% last year.

However, the subordinate bonds were priced at a higher yield than the equivalent tranche of the 2017 deal. The class ‘B’ notes were priced at 465bp over swaps, for a yield of 7.719%, compared with 6% for last year’s offering.

The deal was led by Credit Suisse. Kroll Bond Rating Agency assigned an A- rating to the senior class, while the junior notes were not rated.

Meanwhile, Hannon Armstrong, a real estate investment trust with investments that sit at the intersection of renewable energy and real estate, is in the market with its first ever residential solar securitization, SunStrong 2018-1.

ABS-15G documents filed by KPMG indicate that Deutsche Bank and Crédit Agricole are the banks on the deal, which will securitize 37,568 residential solar leases.

The Annapolis, Maryland-based REIT completed a $100.5m securitization in 2015 backed by cash flows from wind, solar and other renewable energy assets on its balance sheet.