KBRA Assigns Preliminary Ratings to EverBright Solar Trust 2024-A
KBRA assigns preliminary ratings to two classes of notes totaling $288.49 million issued by EverBright Solar Trust 2024-A, backed by residential solar contracts originated by EverBright, LLC, a subsidiary of NextEra Energy, Inc. The securitization is collateralized by prime quality solar receivables with balances ranging from $10,000 to $150,000, original terms of 10 to 25 years, and interest rates of 3.99% to 10.99%. KBRA applied various methodologies to analyze the asset-backed securities, EverBright's portfolio pool data, and proposed capital structure under stressed cash flow assumptions.
The preliminary ratings assigned by KBRA to EverBright Solar Trust's asset-backed securitization are indicative of the confidence in the underlying assets, which in this case are residential solar retail installment contracts. The affiliation with NextEra Energy, a well-established energy company, provides a backdrop of stability and industry experience. It's important to note that the solar industry is seen as a growth sector and this securitization allows EverBright to leverage its customer receivables into capital for further expansion.
Investors should be aware of the interest rates on these receivables, which range from 3.99% to 10.99%. These rates are competitive within the consumer finance sector and suggest a balanced approach to risk, catering to 'prime quality' customers. The long-term nature of the contracts (10 - 25 years) also suggests a stable cash flow for investors, although this is counterbalanced by the inherent risk of default over such periods.
From a financial perspective, the capital raised through this securitization could impact EverBright's and NextEra's ability to invest in new technologies and expand market share in the competitive renewable energy sector, potentially affecting their stock performance positively if managed effectively. However, the complexity of the securitization and the reliance on consumer creditworthiness are factors that require careful scrutiny.
The residential solar market is growing, driven by consumer interest in renewable energy and supportive government policies. EverBright's securitization of solar receivables is a strategic move to capitalize on this trend. By pooling the receivables and offering them as an investment vehicle, EverBright is not only diversifying its funding sources but also tapping into the appetite for green investments among institutional investors.
The involvement of KBRA and the application of its rating methodologies, including an ESG Global Rating Methodology, underscore the increasing importance of environmental, social and governance factors in investment decisions. This could attract a broader range of investors, potentially increasing liquidity and lowering capital costs for EverBright.
For stakeholders, the key consideration will be the performance of the solar assets and the creditworthiness of the customers. The prime quality of the customers is reassuring, but the solar industry's sensitivity to policy changes and technological advancements can introduce volatility to the underlying asset performance.
The explicit inclusion of an ESG Global Rating Methodology by KBRA in their assessment process for EverBright Solar Trust's securitization reflects a broader shift in the investment community towards sustainable and responsible investments. The focus on residential solar power generation aligns with global efforts to transition to cleaner energy sources, which is a positive sign for investors concerned with long-term sustainability issues.
Investors looking at the long-term impact of their portfolios on the environment will view EverBright's initiative as an opportunity to contribute to the reduction of carbon emissions. The securitization's success could set a precedent for similar financial instruments in the renewable energy sector, potentially influencing the flow of capital towards more sustainable projects.
However, the ESG impact is not without risks. Regulatory changes, technological disruptions and shifts in consumer behavior towards solar energy adoption are factors that can affect the performance of these securities. The alignment of EverBright's business model with ESG principles will be critical in managing these risks and ensuring long-term value creation for stakeholders.
03/13/2024 - 01:04 PM
NEW YORK --(BUSINESS WIRE)--
KBRA assigns preliminary ratings to two classes of notes totaling $288.49 million
Headquartered in Juno Beach, FL , EverBright was founded and organized as a limited liability company in Delaware in 2021 and fully launched its receivables origination program in early 2022. The Company is a subsidiary of NextEra Energy, Inc, which has been an energy producer since 1925 and is publicly listed on the New York Stock Exchange (NYSE: NEE) with a market cap of over $115 billion $177 billion
EVBRT 2024-A is collateralized by a pool of solar receivables that are made to mostly prime quality customers to finance residential solar power generation and/or storage systems, including solar panels and any additional products, equipment or services related to installation. Currently, EverBright offers solar receivables with balances of $10,000 $150,000 3.99% - 10.99% .
KBRA applied its General Global Rating Methodology for Asset-Backed Securities as well as its Consumer Loan ABS Global Rating Methodology, Global Structured Finance Counterparty Methodology and ESG Global Rating Methodology. In applying the methodologies, KBRA analyzed EverBright’s portfolio pool data, underlying collateral pool and proposed capital structure under stressed cash flow assumptions. KBRA considered its operational review of EverBright, as well as periodic update calls with the Company. Operative agreements and legal opinions will be reviewed prior to closing.
To access rating and relevant documents, click here .
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Methodologies
Disclosures
Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.
A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here .
Information on the meaning of each rating category can be located here .
Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com .
About KBRA
Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. 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. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.
Doc ID: 1003120
View source version on businesswire.com: https://www.businesswire.com/news/home/20240313079374/en/
Analytical Contacts
Melvin Zhou, Managing Director (Lead Analyst)
melvin.zhou@kbra.com
Michael Polvere, Associate Director
michael.polvere@kbra.com
Vicky Xiao, Analyst
vicky.xiao@kbra.com
Eric Neglia, Head of Commercial and Consumer ABS (Rating Committee Chair)
eric.neglia@kbra.com
Business Development Contact
Arielle Smelkinson, Senior Director
arielle.smelkinson@kbra.com
Source: Kroll Bond Rating Agency, LLC
The ticker symbol for NextEra Energy, Inc. is NEE.
NextEra Energy, Inc. has a market cap of over $115 billion as of December 31, 2023.
EverBright offers interest rates of 3.99% to 10.99% for solar receivables.
EverBright's receivables finance residential solar power generation and/or storage systems, including solar panels and related products, equipment, or services.
KBRA applied its General Global Rating Methodology for Asset-Backed Securities, Consumer Loan ABS Global Rating Methodology, Global Structured Finance Counterparty Methodology, and ESG Global Rating Methodology.
