Sunnova confirms $219.6m securitization

October 20, 2023

US residential solar and battery storage provider Sunnova Energy International has confirmed the pricing of its Hestia I securitization, which indirectly benefits from a partial guarantee provided by the US Department of Energy (DOE) Loan Programs Office (LPO).

Securitization processes involve the pooling of assets and the repackaging them into interest-bearing securities, that is, tradable financial assets.

The securitization consists of $219.6 million in indicatively rated AAA (sf)/AA+(sf) 5.75% notes and $24.4 million in indicatively rated BB (sf) 8.25% notes. The notes carry a weighted average life of approximately 5.01 years through the Anticipated Repayment Date in November of 2030 and will have a rated final maturity in December 2050. The notes are not directly guaranteed by DOE.

The notes are backed by a diverse portfolio of rooftop solar systems, battery storage systems, and combined rooftop plus storage systems distributed across more than 20 states and territories. The transaction is expected to close by November 8, 2023, subject to customary closing conditions.

William J. (John) Berger, founder and CEO of Sunnova, said: “Project Hestia stands as a testament to Sunnova and the DOE’s unwavering commitment to spearheading transformative initiatives that benefit customers, empower communities, and enhance the overall energy landscape in the United States. This successful pricing of Project Hestia’s first securitization showcases our continuing dedication to pioneering sustainable, reliable, and cost-effective energy solutions.”

Robert Lane, chief financial officer of Sunnova, commented: “With this securitization, Project Hestia has set remarkable benchmarks for both credit ratings and cost of capital within our sector. Hestia I achieved a weighted average spread of 197 basis points over the benchmark interest rate through the BB level. With the indirect benefit DOE partial loan guarantee, Sunnova has not only made history by issuing the first residential solar offering with an expected AAA rating for its senior tranche notes but has also, upon close, successfully attracted 20 new fixed income investors to our ABS channel.”