KBRA Comments on Chapter 11 Filing of Sunnova Subsidiary and Reduction in Workforce

NEW YORK--(BUSINESS WIRE)--In an 8-K filing on June 5, 2025, Sunnova Energy Corporation (Sunnova)—the sponsor and originator of 24 residential solar loan and lease transactions rated by KBRA¹ —disclosed that its wholly-owned subsidiary, Sunnova TEP Developer, LLC (Sunnova TEP), had filed a voluntary petition for relief under Chapter 11 of U.S. Bankruptcy Code. Sunnova also reported that its Board approved a reduction in force, effective May 30, 2025, of approximately 718 employees or 55% of its workforce. Given these developments, it is plausible that additional Sunnova subsidiaries— and potentially Sunnova itself—may seek bankruptcy protection in the near future.

KBRA is currently monitoring the situation, as it maintains ratings on 54 classes of notes issued from the 24 solar ABS transactions totaling $6.0 billion. These transactions comprise 13 loan and 11 lease deals, for which Sunnova also serves as production guarantor and performance guarantor.

Even if Sunnova were to file for bankruptcy, neither that event nor the bankruptcy of Sunnova TEP, in and of itself, would directly trigger a manager or servicer termination event within the ABS, as neither entity is designated as the transaction manager or servicer under the transaction documents. However, two wholly-owned subsidiaries of Sunnova, Sunnova ABS Management or Sunnova TE Management, LLC (collectively, Sunnova Management), act as transaction manager and/or servicer and are responsible for the administration, collection, and management services for the related ABS. If either of these entities were to file for bankruptcy, it could trigger a manager or servicer termination event. Furthermore, the controlling class noteholders, which generally comprise the most senior noteholders, could cause a termination event if they deem that the bankruptcy of Sunnova (or any of its subsidiaries) has impaired Sunnova Management’s ability to perform its duties.

Each transaction includes a transition manager, Computershare Trust Company or Wilmington Trust, NA, which is responsible for overseeing the performance of the transaction manager or servicer and assists in the transition to a replacement manager if a manager termination event were to occur. The securitizations also have a back-up servicer that can mitigate the risk of payment disruption during a servicer transfer. It is KBRA’s understanding that Sunnova Management plans to remain transaction manager and/or servicer for each transaction, as applicable.

Each issuer is a bankruptcy-remote entity with a first-priority perfected security interest in the collateral. If a servicer transition event were to occur, there is the potential for temporary cash flow disruption to the trust during the transition process. Should this occur, KBRA will consider the magnitude of the disruption, along with potential increases in delinquencies, as part of its ongoing monitoring efforts to determining whether Watch Placements and/or rating actions need to be effectuated.

The tables below depict the performance of the outstanding solar loan and lease transactions as of the latest payment date reports, dated May 2025. To date, timely interest distributions have been made to each of the related notes since closing.

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^1Includes published and unpublished transactions.

KBRA-Rated^(1) Sunnova Solar Loan Transactions
Transaction Name	Closing Date	Pool Factor	Months Seasoned	Delinquency Rate	Cumulative Net Loss
Sunnova 2019-A	Jun-19	60.8%	71	2.0%	5.0%
Sunnova 2020-A	Jun-20	65.5%	59	2.4%	5.2%
Sunnova 2021-A	Feb-21	72.5%	51	2.6%	4.7%
Sunnova 2021-B	Jul-21	76.6%	46	2.3%	4.9%
Sunnova 2021-C	Oct-21	78.8%	43	2.8%	4.9%
Sunnova 2022-A	Feb-22	80.3%	39	2.6%	5.0%
Sunnova 2022-B	Aug-22	83.4%	33	3.3%	5.2%
Sunnova 2022-C	Nov-22	83.8%	30	3.3%	4.9%
Sunnova 2023-A	May-23	88.2%	24	2.5%	2.3%
Sunnova 2023-B	Aug-23	88.5%	21	2.5%	2.2%
Sunnova Hestia 2023-GRID1	Nov-23	89.0%	18	3.7%	3.4%
Sunnova Hestia 2024-GRID1	Jun-24	93.1%	11	5.9%	2.8%
^1Does not include private transactions with unpublished ratings.
Note: For Sunnova 2019-A, on the October 2021 Distribution date, Sunnova repurchased approximately $3.8 million of defaulted loans. KBRA cumulative net loss (CNL) levels include the re-purchased loans. For Sunnova 2022-C, on the April 2023 Distribution date, Sunnova repurchased approximately $1.7 million of defaulted loans. KBRA CNL levels include the re-purchased loans. For Sunnova Hestia 2023-GRID1 and Sunnova Hestia 2024-GRID1, the Class 1-A Notes benefit from a Department of Energy (DOE) guarantee for principal and interest payments (see related commentary here).

KBRA-Rated^(1) Sunnova Solar Lease Transactions
Transaction Name	Closing Date	Pool Factor	Months Seasoned	DSCR	Cumulative Gross Default
Sunnova 2018-1	Nov-18	83.9%	79	1.47	5.3%
Sunnova 2020-1	Feb-20	88.9%	64	1.55	3.4%
Sunnova 2020-2	Nov-20	91.8%	54	1.48	3.3%
Sunnova 2021-1	Jun-21	89.7%	48	1.48	1.8%
Sunnova 2022-1	Jun-22	94.0%	35	1.43	0.8%
Sunnova 2023-1	Apr-23	98.3%	25	1.17	0.4%
Sunnova 2024-1	Feb-24	99.8%	16	1.15	0.1%
Sunnova 2024-2	Aug-24	100.7%	10	1.17	0.0%
^1Does not include private transactions with unpublished ratings.

Related Publications

• KBRA Comments on Amendment to Sunnova’s Loan Guarantee Agreement with DOE
• KBRA Monitoring Sunnova Transactions Following Going Concern Warning
• Sunnova Helios & Sunnova Hestia Solar Loan Backed Notes Comprehensive Surveillance Report
• Sunnova Comprehensive Surveillance Report

About KBRA

KBRA, one of the major credit rating agencies, is registered in the U.S., EU, and the UK. KBRA is recognized as a Qualified Rating Agency in Taiwan, and is also a Designated Rating Organization for structured finance ratings in Canada. As a full-service credit rating agency, investors can use KBRA ratings for regulatory capital purposes in multiple jurisdictions.

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