KBRA - Kroll Bond Rating Agency Inc.

11/08/2018 | Press release | Distributed by Public on 11/08/2018 12:58

KBRA Assigns Final Ratings to Sunnova Helios II Issuer, LLC, Solar Asset Backed Notes, Series 2018-1

KBRA Assigns Final Ratings to Sunnova Helios II Issuer, LLC, Solar Asset Backed Notes, Series 2018-1

NEW YORK, NY (November 8, 2018) - Kroll Bond Rating Agency (KBRA) assigns final rating to one class of notes from Sunnova Helios II Issuer, LLC, Series 2018-1, a residential distributed generation solar securitization.

KBRA's analysis of the transaction was based on a portfolio of solar assets set as of a statistical cut-off date. Included in this original portfolio was a small percentage of solar assets located in the Commonwealth of Northern Mariana Islands ("CNMI"), which was severely impacted by Typhoon Yutu, a category 5 storm that hit the region after the cut-off date, causing indeterminate damage to these solar assets. As a result, these solar assets will be replaced, as of financial close, with solar assets located in other regions that are already represented in the portfolio. The replacement solar assets will be of equal or better credit quality than the solar assets located in CNMI and will not have an adverse effect on transaction cash flows, the ADSAB and average FICO for the portfolio, or KBRA's analysis of the transaction and rating on the Class A Notes. Given this, KBRA did not re-analyze the portfolio to include the replacement solar assets.

This transaction is Sunnova Energy Corporation's ("Sunnova" or the "Company") second securitization. As of September 30, 2018 (the "Cut-Off Date"), the transaction was backed by a diversified pool of 14,777 leases, power purchase agreements ("PPA"), and EZ Pay PPAs (each a "Solar Service Agreement" or "SSA"), and 43 hedged solar renewable energy certificate ("SREC") contracts, associated with residential solar photovoltaic installations ("PV Systems").

As of the Cut-Off Date, the SSAs had an aggregate discounted solar asset balance ("ADSAB") of approximately $283.2 million while the SREC contracts had an ADSAB of approximately $25.8 million, for a total ADSAB of approximately $309.0 million. The PV Systems were geographically distributed across 17 states, Guam, Puerto Rico and Northern Mariana Islands, with New Jersey, California, and Guam constituting approximately 65.9% of the collateral by count and approximately 61.6% of the total ADSAB. Approximately 98.5% of the solar service agreements had an original term of 25 years. The SSAs consisted of approximately 15.7% PPAs, 40.1% EZ Pay PPAs, and 44.2% lease agreements by SSA ADSAB and approximately 17.5% PPA, 40.8% EZ Pay PPA, and 41.7% lease agreements by number. As of September 30, 2018, the weighted average remaining term of the SSAs was 273 months and the weighted average FICO of the underlying customers of the PV Systems was 735.

Class

Rating

Initial Note Amount

A Notes

A- (sf)

$202,000,000

B Notes

NR

$60,700,000

To access ratings, reports and disclosures, click here.

Related Publications: (available at www.kbra.com)

Analytical Contacts:

Xilun Chen, Senior Director (646) 731-2431 [email protected]

Cecil Smart, Jr., Managing Director (646) 731-2381 [email protected]

Andrew Lin, Director (646) 731-2483 [email protected]

Shi Shen, CFA, Associate (646) 731-2480 [email protected]

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KBRA is a full service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. 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, is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider, and is 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.