Investors 'clamour' for solar bonds

There is “tremendous” appetite for securitized solar bonds among institutional investors, with some viewing them as an alternative to investing in power utilities, according to the financier at the centre of SolarCity’s two recent successful securitizations.

Owners of distributed PV assets face a number of stumbling blocks in bringing rating-agency-approved securitized solar bonds to the market, as SolarCity has done, says Steve Viscovich, managing director for securitized products at Credit Suisse Securities.

But winning over potential investors is not one of them.

“The two [SolarCity] deals done to date were massively oversubscribed,” said Viscovich, speaking Monday at Intersolar North America. “Investors appreciate the value proposition – they get it.”

“They have tremendous, tremendous appetite for these bonds.”

California-based SolarCity last year raised $54.4m through the first-ever sale of solar asset-backed notes with an investment-grade rating. This April SolarCity raised another $70.2m, at an even better interest rate.

Many investors in SolarCity’s notes saw them as an avenue for portfolio diversification, including as an “energy utility substitute”, Viscovich says. Others simply saw them as a good deal, taking advantage of the “conservatism” built into their pricing, given the newness of the asset class.

Credit Suisse acted as sole structuring agent and sole bookrunner for both securitizations.

In his more than 15 years working with securitized financial products, Viscovich says he has never seen as broad an investor base buying into a series of notes, as happened with SolarCity’s.

“From insurance companies, pension funds, renewables funds, sustainability funds, family offices, hedge funds – you name it.”

“That’s saying a lot about this industry, and the impact it will have on the investor base.”