A pool of payments on residential solar leases will provide collateral for $221 million in asset-backed securities (ABS) from sponsor IGS Solar, which will sell the notes through a pair of class A and B tranches in the IGS Solar Shamrock Issuer 2026-1 deal.
The ABS have an anticipated repayment date of January 2034, with a final maturity date of January 2057, according to analysts at Kroll Bond Rating Agency. The senior tranche, which will issue the bulk of notes, has advance rates of 59.7% on the PV 6.0, based on the securitization share of the total aggregate discounted solar asset balance (ADSAB) from the underlying leases, KBRA said.
For the same class of notes, the PV 7.25% advance rate is 68.2%, the rating agency said.
IGS Solar originated the solar leases and will serve as the transaction manager, KBRA said. ATLAS SP Securities, division of Apollo Global Securities, is the structuring agent on the deal.
The notes will receive quarterly interest and principal payments, deriving credit enhancement from a structure that includes a supplemental reserve account, a seasonality reserve account and excess spread.
Specifically, the supplemental reserve account will be funded at closing with excess cashflows that are required to be deposited into the account over time, beginning in April 2034 until January 2039. This will provide additional cash for certain costs the project companies might incur, like equipment replacement.
The deal will also release funds to cover interest shortfall that a liquidity reserve account, also part of the deal structure, does not offset.
Overcollateralization, at a level of 28.6%, also helps shore up credit to the notes, which is calculated from the excess of the securitization share of ADSAB over the note principal, KBRA analysts said.
New Jersey, New York and Pennsylvania heavily tip the geographic concentration in the underlying pool, accounting for 55.9% of the number of the PV systems and 54.5% by ADSAB, KBRA said. New Jersey residents account for 21.3% of PV systems in the transaction, the rating agency said.
KBRA assigns A- to the class A notes and BB- to the class B notes.
