NEW YORK--(EON: Enhanced Online News)--Kroll Bond Rating Agency (KBRA) assigns a preliminary rating of AA (sf) to Renew 2017-1, Renew Financial A Notes, Series 2017-1 (Renew 2017-1). The notes are newly issued asset-backed securities backed by a portfolio of Property Assessed Clean Energy (PACE) assets.
The notes are secured by a portfolio of PACE assets (“PACE Assets”) acquired by Renew 2017-1 (the “Issuer”) at closing (the “Initial PACE Assets”) and during the Prefunding Period (the “Subsequent PACE Assets”). The PACE Assets consist of limited obligation improvement bonds issued by the California Statewide Communities Development Authority and by the County of Los Angeles, California via the CaliforniaFIRST Residential PACE Program, as well as the debt obligations issued by the Florida Green Finance Authority via the RenewPACE program. The Initial PACE Assets are secured by 4,814 PACE assessments levied against 4,626 residential properties (“PACE Assessments”) in forty California counties and nine Florida counties. The average PACE Assessment is approximately $30,379 with an average annual payment of approximately $3,355. The transaction benefits from credit enhancement in the form of excess spread, overcollateralization, and a liquidity reserve account.
KBRA analyzed Renew 2017-1 using the General Rating Methodology for Asset-Backed Securities published on July 30, 2012. PACE assessments fall within Category 1: Financial Assets. The key determinants considered in the rating outcome are: a structural and legal analysis of the transaction; the treatment of PACE assessments as senior tax liens; and the creditworthiness of the counties acting as servicer.
KBRA believes the transaction benefits from sufficient credit enhancement and a structure that accelerates principal payments to the rated notes upon weakening asset performance. In addition, KBRA views the eligibility requirements, especially the low LTV of the PACE assessment, as a positive credit consideration for this transaction.
|Class||Rating||Initial Principal Balance|
|Class A Notes||AA (sf)||$189,140,000|
About Kroll Bond Rating Agency
KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).