November remittance reports showed lower annualized net losses across securitized solar loan pools and relatively stable delinquencies during the October collection period. Meanwhile, prepayment rates (CPR) remained near historical lows during the period. Annualized net losses in KBRA’s Solar Loan Index fell 21 basis points (bps) month-over-month (MoM) but climbed 28 bps year-over-year (YoY) to 1.56% (see Figure 1). Delinquency rates held mostly steady, with early-stage delinquencies (30-59 days) rising 2 bps MoM and 15 bps YoY to 0.60%, while late-stage delinquencies (60-119 days) were unchanged MoM but climbed 20 bps YoY to 0.56% (see Figure 2). Meanwhile, solar loan prepayments ticked up 30 bps MoM but were down 127 bps YoY and remained near historically low levels at a 4.88% CPR (see Figure 3).
Given weaker consumer credit fundamentals and the resumption of student loan payments in October 2023, solar loan credit performance may come under pressure as 2024 approaches. Similarly,…