Mosaic, a provider of solar loan financing solutions for U.S. homeowners, has completed its second term securitization of residential solar loans. The Mosaic Solar Loans 2017-2 transaction (MSAIC 2017-2) is the company’s largest solar loan securitization issued to date, with $307.5 million in bonds sold across four tranches. According to the company, MSAIC 2017-2 generated over $1.7 billion in investor orders and was ultimately placed with 29 institutional investors based in the U.S. and Europe.
Mosaic says solar loans represent a growing asset class that is gaining market share as consumers shift away from solar leases and increasingly choose to benefit from ownership of residential solar systems. The company notes it has funded more than $1.3 billion in solar loans since its inception and expects to continue to be a frequent issuer in the securitization market.
“We are thrilled with the tremendous interest in this deal and what it means for the solar industry,” says Billy Parish, co-founder and CEO of Mosaic. “After the overwhelming success of our first securitization, we knew there was deep and broad demand from investors to fund residential solar loans. We are excited that this transaction both extends our relationships with existing investors and brings in new U.S. and international buyers.”
The offering consists of $307.5 million of notes rated by Kroll Bond Rating Agency with four tranches that carry ratings from “A” to “BB+”. According to Mosaic, the notes are modeled to a weighted average life of approximately 4.1 years and are backed by an initial collateral pool of $275 million of loans with an average FICO score of 738. The company says an additional $75 million of loans may be purchased during the three-month supplemental purchase period, based on defined eligibility criteria. Given the strong oversubscription levels, Mosaic says all tranches priced inside initial guidance levels, achieving an all-in yield of 4.2% and significant spread compression compared to the MSAIC 2017-1 transaction.
MSAIC 2017-2 received a “Green Bond” designation based on the standards published by the International Capital Markets Association and pursuant to a report issued by Sustainalytics US Inc.
Deutsche Bank, BNP Paribas, and Guggenheim Securities acted as joint-lead bookrunners for the offering, with DZ Financial Markets as co-manager. Deutsche Bank acted as sole structuring agent.