The first residential solar loan-backed securitization came to market in early 2016, and nearly a decade later, the sector has grown into a mainstream ABS product. Solar loan ABS offers longer-duration exposure compared to most other consumer ABS asset classes and is broadly viewed as compatible with environmental, social, and governance (ESG) goals, with the underlying loans enabling homeowners to adopt renewable energy and hedge against rising utility bills. However, the sector currently faces several headwinds, including the financial viability of certain originator/servicers, heightened regulatory scrutiny, and weaker-than-expected credit performance in some recently issued deals. This report examines the current landscape of the residential solar ABS market, highlighting trends in credit performance, new issue supply, originator trends, and ratings activity.
Key Takeaways
- Solar loan collateral pools are typically composed of prime borrowers, which have shown relative…