Loanpal solar loan securitization tests the water, signals a post-Covid market reopening


Goldman Sachs yesterday priced two securitizations for $459 million worth of Loanpal solar loans, marking the reopening of the residential solar loan asset backed security (ABS) market. The Loanpal loans securitized in these transactions were previously purchased by Goldman Sachs and funds managed by CarVal Investors.

Credit markets effectively closed because of the Covid-19 pandemic, and these Loanpal solar loan securitizations tested the water for regular issuers, Eric Neglia, managing director and head of consumer ABS at Kroll Bond Rating Agency said. “[These securitizations] demonstrated that there is sufficient investor interest and demand,” he added.

Already, it looks like these securitizations might serve as a catalyst for others — as Sunnova and Solar Mosaic are now positioned to come to market with solar ABS transactions.

“Solar loans have proven to be a resilient asset class through these turbulent times and we are pleased to commit more of the firm’s capital to providing a path for U.S. homeowners to reduce their carbon footprint,” Goldman Sachs’ Katrina Niehaus, managing director said.

Goldman Sachs expanded its warehouse facility with Loanpal to $300 million and, as part of its commitment to environmental, social and governance (ESG) investment criteria, it committed to buying about $320 million of principal of loans from Loanpal during the next six months.

Ultimately, a healthy ABS market should benefit other companies with U.S. residential solar exposure. “Looking ahead, we continue to believe that the cost of financing for solar ABS could move [about] 100 basis points lower than pre-Covid levels as we expect solar assets to continue to perform well in this downturn,” Roth Capital Partners said in a June 2 research note. In research this week, the firm added that some key loan providers are reporting that they are experiencing a rapid recovery in approval volumes, notably in May. Approvals are the leading indicators for installations.

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