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Sunrun (Nasdaq:RUN), the nation’s leading provider of clean energy as a subscription service, has successfully priced its latest securitization of leases and power purchase agreements (PPAs). This marks Sunrun's twelfth securitization since 2015 and the third issuance in 2024, underscoring the company’s robust capital markets performance.
“Sunrun continues to demonstrate strong execution in the capital markets; our latest securitization again highlights our industry-leading cost of capital,” said Danny Abajian, Sunrun’s Chief Financial Officer. “Our strong execution is a testament to Sunrun’s deep capital markets relationships, the quality of our assets, and our proven track record as an originator and servicer.”
The securitization involves two classes of publicly placed A+ rated notes, designated as Class A-1 and Class A-2, as well as a retained BB rated class of notes, known as Class B. The transaction includes $75 million in Class A-1 notes and $290.4 million in Class A-2 notes, which were marketed as part of a public asset-backed securitization. Both classes were oversubscribed, reflecting strong investor interest, with Class A-1 notes priced with a coupon of 5.49% and Class A-2 notes at 5.88%. The Class A-1 notes achieved a spread of 210 basis points and a yield of 5.538%, while Class A-2 notes priced at a spread of 240 basis points and a yield of 5.933%. The initial balance of the Class A notes signifies a 73.8% advance rate on the Securitization Share of ADSAB.
The expected weighted average life for the Class A-1 and Class A-2 notes is 4.83 years and 6.99 years, respectively, with both classes having an Anticipated Repayment Date of October 30, 2031, and a final maturity date of October 30, 2059.
In line with previous transactions, Sunrun plans to pursue additional subordinated subsidiary-level non-recourse financing, secured in part by distributions from the retained Class B notes. This strategy is expected to enhance the cumulative advance rate for Sunrun.
The notes are backed by a diversified portfolio consisting of 21,281 solar energy systems spread across 19 states and Puerto Rico, serving 73 utility service territories. Notably, the weighted average customer FICO score stands at 741, indicating a strong credit profile.
The transaction is anticipated to close by September 26, 2024. RBC Capital Markets acted as the sole structuring agent and joint bookrunner, alongside BofA Securities, Citigroup, Deutsche Bank Securities, and J.P. Morgan, with KeyBanc Capital Markets serving as co-manager for the securitization.
With this latest securitization, Sunrun continues to reinforce its position as a leader in the clean energy market while providing sustainable solutions for customers across the nation.
