September remittance reports showed generally weaker credit performance across securitized solar loan pools during the August collection period. Annualized net losses in KBRA’s Solar Loan Index came in at 1.85%, rising 24 basis points (bps) month-over-month (MoM) and 47 bps year-over-year (YoY) (see Figure 1). Following three consecutive monthly increases, early-stage (30-59 days) delinquencies fell 4 bps MoM but remained up 17 bps YoY, landing at 0.56%. However, as early-stage delinquencies roll to late-stage (60-119 days) delinquency status, this cohort logged a third consecutive monthly increase of 5 bps MoM and 22 bps YoY to 0.56% (see Figure 2). Meanwhile, prepayment rates (CPR) climbed 63 bps MoM but fell 230 bps YoY, coming in at 5.94% (see Figure 3).
Solar loan credit performance may soften through the remainder of 2023 due to weaker consumer credit fundamentals and the resumption of student loan payments in October (see