Press Release|ABS

KBRA Maintains Watch Developing Placement on SunStrong 2018-1 Issuer, LLC

20 Mar 2024   |   New York


KBRA maintains its Watch Developing Placement on the Class A Notes of SunStrong 2018-1 Issuer, LLC (SunStrong 2018-1 or Issuer), a residential solar lease transaction. The rating was previously placed on Watch Developing on December 21, 2023 due to the financial health of SunPower Corporation (SunPower or the Company) who serves as sub-manager. The manager of the transaction, SunStrong Capital Holdings, LLC (SunStrong), was formed in 2018 and is jointly owned 51% directly by SunPower and 49% indirectly by Hannon Armstrong. According to a December 18, 2023 10-K/A issued by SunPower, the Company recently breached a covenant in their credit agreement due to a delay in filing their 10-Q caused by them identifying a material weaknesses in their internal controls over financial reporting. As a result, creditors at that time could have demanded immediate repayment of amounts owed under their credit facilities. In connection with this, and also reported in the 10-K/A on December 18, 2023, SunPower stated that substantial doubt exists about their ability to continue as a going concern. If SunPower were to file for bankruptcy it could cause a manager termination event and have a negative impact on the transaction’s performance.

On February 23, 2024, SunPower announced it secured over $300 million in project financing commitments for its residential solar and storage lease programs, which will be paid upon installation. In addition, on February 14, 2024, SunPower announced it had raised $175 million of capital financing through a second lien term loan from SunPower’s majority shareholder. The Company also obtained new long-term waivers from its financial partners and entered into an amendment to its revolving corporate debt facility to provide access to $25 million in undrawn capacity under the facility. The Watch Placement will continue to be maintained as KBRA considers additional information, including the pending release of SunPower’s 10-K.

 The table below displays the current capital structure.

Sunstrong, as manager, is responsible for providing all administrative, collection and other management services for the Issuer and in respect of the managing members. SunStrong, although obligated to ensure all services are performed, has delegated substantially all of its responsibilities to SunPower Services, an indirect wholly owned subsidiary of SunPower, as sub-manager. In the event that SunPower Services is terminated, the delegation of the manager obligations will also terminate, provided that, no such termination will be effective unless a replacement sub-manager has been appointed which per the management agreement may be Hannon Armstrong Capital, LLC, a subsidiary of Hannon Armstrong.

The transaction includes GreatAmerica Portfolio Services Group LLC (GreatAmerica) as transition manager who will assist in the transition to a replacement manager if there is a manager termination event. Manager termination events per the transaction documents include, but not limited to:

  • certain events of bankruptcy, insolvency, receivership or reorganization of the manager or the sub-manager; or
  • the manager or the sub-manager ceases to be engaged in the business of monitoring or maintaining assets of a type comparable to the solar assets.

KBRA will continue to monitor the developments and implications of SunPower’s financial health, as well as possible manager transitions and performance of the SunStrong 2018-1 transaction.

To access rating and relevant documents, click here.

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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

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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.

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