NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to four classes of notes issued by Dividend Solar Loans 2018-1, LLC (“DIV 2018-1”). This is a $104.66 million term ABS securitization collateralized by a pool of $110.17 million residential solar loans. The transaction that is expected to close on April 19, 2018.
This transaction is Dividend Finance, Inc.’s (“Dividend” or the “Company”) second securitization. The Notes are backed by a pool of mostly prime quality residential consumer solar loans and underlying Solar Energy Systems. Credit enhancement for the Notes consists of i) overcollateralization ii) subordination (in the case of Class A, Class B and Class C Notes) iii) excess spread and iv) amounts on deposit in the reserve account. The loan collateral in the transaction will include a pool of $110.17 million residential solar loans (approximately $92.4 million of “Initial Solar Loans” at closing plus $17.8 million of prefunded loans (“Subsequent Solar Loans”) from two different loan products that contain a combination of interest-only periods and required or optional prepayment thresholds.
Dividend is a California based specialty lender providing financing in the clean energy space through residential solar loans, home energy-related home improvement loans, as well as residential and commercial PACE assessments. Dividend was formed through the merger of Dividend Solar, Inc. and Figtree Finance Company in 2016. Dividend originates loans in 31 states and the District of Columbia through its state lending licenses where required. Loans typically have original balances of $10,000 - $50,000 (but may exceed this amount); original loan terms of 12 or 20 years and fixed interest rates of 2.50% - 9.99% (but may step-up if certain incentive payments are not made).
KBRA applied its Global General Rating Methodology for Asset-Backed Securities as part of its analysis of the transaction’s underlying collateral pool and the proposed capital structure. KBRA also conducted an operational assessment of Dividend in March 2018, as well as a review of the transaction’s legal structure and transaction documents. KBRA reviewed the operative agreements and legal opinions for the transaction prior to closing.
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Representations & Warranties Disclosure
All Nationally Recognized Statistical Rating Organizations are required, pursuant to SEC Rule 17g-7, to provide a description of a transaction’s representations, warranties and enforcement mechanisms that are available to investors when issuing credit ratings. KBRA’s disclosure for this transaction can be found in the report available here.
Related Publications: (available at www.kbra.com)
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