May remittance reports showed higher net losses but mostly stable delinquency rates across securitized solar loan pools during the April collection period. Annualized net losses (ANL) in KBRA’s Solar Loan Index climbed 61 basis points (bps) month-over-month (MoM) and 121 bps year-over-year (YoY) to 2.15% (see Figure 1). Delinquency rates (DQs) remained mostly flat as early-stage (30-59 days) DQs fell 3 bps MoM to 0.47%, while late-stage (60-119) DQs increased 1 bp MoM to 0.49%. Both early- and late-stage DQs remain 13 bps higher on a YoY basis (see Figure 2). Meanwhile, prepayment speeds (CPR) landed at 5.55%, down 128 bps MoM and 553 bps YoY (see Figure 3).
We expect solar loan credit performance to modestly deteriorate through the remainder of the year as consumer credit fundamentals remain under some pressure from high inflation and the resumption of student loan payments. However, solar loans should continue to outperform most other consumer loan product types given the value…