TY - JOUR T1 - Sunshine-Backed Bonds: <em>Assessing Asset Performance</em> <br/> <em>and Creditworthiness</em> JF - The Journal of Structured Finance SP - 110 LP - 112 DO - 10.3905/jsf.2014.19.4.110 VL - 19 IS - 4 AU - Mary Rottman Y1 - 2014/01/31 UR - https://pm-research.com/content/19/4/110.abstract N2 - Sunshine-backed bonds are an emerging class of ABS securities that are being developed by the solar industry as a new source of low cost capital. Solar systems and their related energy contract receivables can be pooled and structured as ABS securities and sold in the institutional market. This panel brought together representatives from the capital markets (investment banks and rating agencies) and the solar industry (solar analytic firms and servicers) to discuss how to assess solar performance and credit worthiness of this new type of bonds. Although the fundamental characteristics of sunshine backed bonds are very similar to traditional consumer ABS deals, there are certain regulatory, equipment and customer-credit-performance variables that are unique to solar assets. Additionally, as this is a new asset class, there is limited historical data on solar systems and customer credit performance to establish benchmarks for expected losses and credit enhancement levels. As a result the initial transactions will most likely be 144A or private placements and the rating agencies are expected to rate them at a low investment-grade level (BBB or BBB-). It is likely that this new asset class will earn higher ratings and lower required credit enhancement levels when more performance and credit information is available.TOPICS: Asset-backed securities (ABS), legal and regulatory issues for structured finance ER -