July remittance reports showed mixed credit performance across securitized solar loan pools during the June collection period. Annualized net losses in KBRA’s Solar Loan Index improved 38 basis points (bps) month-over-month (MoM) but remained 72 bps higher year-over-year (YoY) at 1.64% (see Figure 1). The MoM improvement was predominantly driven by lower defaulted loans in 2021 and 2022 vintage securitizations.
Early-stage (30-59 days) delinquencies came in at 0.54%, up 3 bps MoM and 16 bps YoY, while late-stage (60-119) delinquencies remained constant MoM but climbed 15 bps YoY to 0.49% (see Figure 2). Meanwhile, prepayment rates continue to trend near the low end of historical values, falling 107 bps MoM and 362 bps YoY to 5.56% (see Figure 3). We expect solar loan prepayment rates to oscillate around current levels through the remainder of the year due to slowing home sales and reduced mortgage refinancings owing to the prevailing interest rate environment.
Although inflation and…