NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to two classes of notes issued by Sunnova Helios IV Issuer, LLC, Solar Loan Backed Notes, Series 2020-A (“Sunnova 2020-A”), an asset-backed securitization collateralized by a pool of residential solar loans.
The impact of COVID-19 has resulted in rising unemployment, which can adversely impact the performance of the transaction and consumer loans in general. Owing to KBRA’s expectations of high and rising unemployment, KBRA increased its base case default assumptions for the subject pool in a manner that was consistent with a recent portfolio review of the residential solar loan sector noted in the following press release: KBRA Comments on U.S. Solar Loan ABS Monitoring. The review did not result in Watch Placements on any existing KBRA transaction ratings.
The collateral in the Sunnova 2020-A deal includes approximately $181.1 million of residential solar loans as of the April 30, 2020 statistical cut-off date. The preliminary ratings reflect the initial credit enhancement levels of 27.21% for the Class A notes and 14.71% for the Class B notes.
Sunnova Energy Corporation (“Sunnova”, or the “Company”) is a Houston, TX-based independent solar power company that provides low-cost solar electricity to homeowners, and a wholly owned subsidiary of Sunnova Energy International Inc., a public company. The Company started its operations in January 2013 and began providing solar energy services under its first operating Photovoltaic system in April 2013. The Company had a total customer count of over 80,000 in more than 20 U.S. states and territories as of March 31, 2020.
KBRA applied its Global General Rating Methodology for Asset-Backed Securities and Global Structured Finance Counterparty Methodology as part of its analysis of the transaction’s underlying collateral pool and the proposed capital structure. KBRA also conducted an operational assessment of Sunnova, as well as a review of the transaction’s legal structure and transaction documents. KBRA will also review the operative agreements and legal opinions for the transaction prior to closing.
- Global General Rating Methodology for Asset-Backed Securities
- Global Structured Finance Counterparty Methodology
Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.
A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the U.S. Information Disclosure Form located here.
Information on the meaning of each rating category can be located here.
Further disclosures relating to this rating action are available in the U.S. Information Disclosure Form referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.
KBRA is a full-service credit rating agency registered as an NRSRO with the U.S. Securities and Exchange Commission. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and is a certified Credit Rating Agency (CRA) with the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe is registered with ESMA as a CRA.