KBRA Assigns Preliminary Ratings to Renew 2018-1, Renew A Notes, Series 2018-1

NEW YORK--()--Kroll Bond Rating Agency (KBRA) assigns a preliminary rating of AA (sf) to Renew 2018-1, Renew A Notes, Series 2018-1 (Renew 2018-1). The notes are newly issued asset-backed securities backed by a portfolio of Property Assessed Clean Energy (PACE) assets.

The notes are secured by a portfolio of PACE assets (“PACE Assets”) acquired by Renew 2018-1 at closing (the “Initial PACE Assets”) and during the Prefunding Period (the “Subsequent PACE Assets” and together with the Initial PACE Assets, the “PACE Asset Portfolio”). The PACE Assets consist of limited obligation improvement bonds issued by the California Statewide Communities Development Authority, by the Western Riverside Council of Governments, and by the County of Los Angeles, California via the CaliforniaFIRST Residential PACE Program, as well as the debt obligations issued by the Florida Green Finance Authority via the RenewPACE program. The Initial PACE Assets are secured by 4,542 PACE assessments levied against 4,390 residential properties (“PACE Assessments”) in forty-one California counties and thirteen Florida counties. The average PACE Assessment is approximately $26,755 with an average annual payment of approximately $2,914. The transaction benefits from credit enhancement in the form of excess spread, overcollateralization, and a liquidity reserve account.

KBRA analyzed Renew 2018-1 using the U.S. Property Assessed Clean Energy (PACE) ABS Rating Methodology published on June 1, 2018. The key determinants considered in the rating outcome are: a structural and legal analysis of the transaction; the treatment of PACE assessments as senior tax liens; and the creditworthiness of the counties acting as servicer.

KBRA believes the transaction benefits from sufficient credit enhancement and a structure that accelerates principal payments to the rated notes upon weakening asset performance. In addition, KBRA views the eligibility requirements, especially the low LTV of the PACE assessment, as a positive credit consideration for this transaction.

                     
    Class     Rating     Initial Principal Balance    
    Class A Notes     AA (sf)     $147,342,000    
             

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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About KBRA and KBRA Europe

KBRA is a full service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.

Contacts

Analytical:
Kroll Bond Rating Agency
Cecil Smart Jr., 646-731-2381
Managing Director
csmart@kbra.com
or
Andrew Lin, 646-731-2483
Director
alin@kbra.com
or
Usman Khan, 646-731-2488
Associate Director
ukhan@kbra.com

Contacts

Analytical:
Kroll Bond Rating Agency
Cecil Smart Jr., 646-731-2381
Managing Director
csmart@kbra.com
or
Andrew Lin, 646-731-2483
Director
alin@kbra.com
or
Usman Khan, 646-731-2488
Associate Director
ukhan@kbra.com