August remittance reports showed a modest improvement in annualized net losses but higher delinquency rates across securitized solar loan pools during the July collection period. Annualized net losses in our Solar Loan Index logged a decline of 3 basis points (bps) month-over-month (MoM) but an increase of 59 bps year-over-year (YoY), arriving at 1.61% (see Figure 1). Meanwhile, early- (30-59 days) and late-stage (60-119 days) delinquency rates came in at 0.61% and 0.52%, respectively, rising 7 bps and 3 bps MoM, and 20 bps and 14 bps YoY (see Figure 2). Annualized net losses will likely be under some pressure in the coming months as early-stage delinquencies have increased for three consecutive months and are near historical highs (see Figure 5). With elevated borrowing costs and a sluggish housing market, prepayment rates (CPR) remain low, coming in at 5.33% during the month, down 23 bps MoM and 277 bps YoY (see Figure 3).
Solar loan credit performance should continue to outperform…