NEW YORK–(BUSINESS WIRE)–Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to one class of notes issued by Mosaic Solar Loans 2017-1, LLC (“Mosaic 2017-1”). This is a $138.95 million term ABS securitization collateralized by a pool of $177.9 million residential solar loans. The transaction that is expected to close on February 2, 2017.
This transaction is Solar Mosaic LLC’s (“Mosaic” or the “Company”) first securitization. The notes are backed by a pool of mostly prime quality residential consumer solar loans and underlying solar energy systems, which includes the solar panels, inverter(s), charging, energy monitoring equipment and wiring. Credit enhancement on the notes consists of i) overcollateralization ii) yield supplement overcollateralization (YSOC) and iii) a reserve account. Initial credit enhancement levels, as a percent of the adjusted pool balance (principal balance of the solar loans less the YSOC) will be equal to 20.53%, which consists of 19.50% initial OC and a 1.03% reserve account. Mosaic will use the net proceeds from the issuance of the notes to pay down existing warehouse debt and for general operating purposes.
Mosaic is a California based specialty finance company focused on originating and servicing consumer loans used for the purchase of grid tied residential solar systems. Founded in 2011, Mosaic originates loans to mostly prime credit quality homeowners though its partnerships with over 150 prescreened, independent solar system installers/dealers, including 15 of the top 25 installers nationally.
Mosaic is able to originate loans in 35 states plus Washington, D.C. through its state lending licenses where required. The loans are secured by UCC-1 and fixture disclaimer filings on the solar equipment. The weighted average original balance, loan term and “choice” interest rate of loans in the loan pool as of the December 20, 2016 statistical pool is, $27,947, 17.05 years and 4.34%, respectively. The average customer in the statistical pool is a homeowner with a weighted average FICO score of 746 and 89% of pay through recurring ACH.
KBRA applied its General Rating Methodology for Asset-Backed Securities as part of its analysis of the transaction’s underlying collateral pool and the proposed capital structure. KBRA also conducted an operational assessment of Mosaic in August 2016, as well as a review of the transaction’s legal structure and transaction documents. KBRA will review the operative agreements and legal opinions for the transaction prior to closing.