Solar ABS Sector Sees Two New Deal Structures

In the past week, two new types of solar ABS deals have priced globally – one in the U.S. and the other in Australia – demonstrating the continued growth and interest in this asset class by market participants.

Yesterday, SolarCity announced their first deal with a new structure, a “’cash equity’ investment that monetizes the revenue stream from a portfolio of solar leases.” The $227 million deal was reported in Bloomberg Tuesday, and will be done with Manulife Financial Corp.’s John Hancock Financial unit. While leasing is a significant source of growth for the company, it hasn’t translated into increased cash flow for SolarCity. This deal “lets SolarCity monetize leases, getting cash now to fund its operations.” Radford Small, SolarCity’s executive vice president of global capital markets said this transaction is “a further diversification of our financing sources,” and that it represents “an alternative to ABS, it doesn’t replace it.”

In Australia, another first-time deal backed by solar assets was issued by finance group FlexiGroup. As reported in, the deal is a “landmark issue of green Asset Backed Securities, a type of bond, raising $50 million to refinance residential rooftop solar systems in the first issue of their type in Australia.” What’s encouraging about this development is the pricing execution of the deal, which priced “five basis points better than a non-green certified component” which was part of same $260 million financing.

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