NEW YORK — Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Dividend Solar Loans 2017-1, LLC (“DIV 2017-1”). This is a $128.95 million term ABS securitization collateralized by a pool of $135.7 million residential solar loans. The transaction that is expected to close on October 6, 2017.
This transaction is Dividend Finance, Inc.’s (“Dividend” or the “Company”) first securitization. The Notes are backed by a pool of mostly prime quality residential consumer solar loans and underlying Solar Energy Systems. Credit enhancement for the Notes consists of i) overcollateralization ii) subordination (in the case of Class A and Class B Notes) iii) excess spread and iv) amounts on deposit in the reserve account. The loan collateral in the transaction will include a pool of $135.7 million residential solar loans (approximately $129.5 million of “Initial Solar Loans” at closing plus $6.2 million of prefunded “Subsequent Solar Loans”) from seven different loan products that contain a combination of interest-only periods, payment deferral periods and required or optional prepayment thresholds.
Dividend is a California based specialty lender providing financing in the clean energy space through residential solar loans in addition to residential and commercial PACE assessments. Dividend was formed through the merger of Dividend Solar, Inc. and Figtree Finance Company in 2016. Dividend originates loans in 25 states through its state lending licenses where required. Loans typically have original balances of $10,000 – $50,000 (but may exceed this amount); original loan terms of 12 or 20 years and fixed interest rates of 2.50% – 9.99% (but may step-up if certain incentive payments are not made).
KBRA applied its General Rating Methodology for Asset-Backed Securities as part of its analysis of the transaction’s underlying collateral pool and the proposed capital structure. KBRA also conducted an operational assessment of Dividend in March 2017, as well as a review of the transaction’s legal structure and transaction documents. KBRA will review the operative agreements and legal opinions for the transaction prior to closing.
| Class | Preliminary Rating | Principal Balance | ||||
| A | A (sf) | $115,376,000 | ||||
| B | BBB (sf) | $6,787,000 | ||||
| C | BB+ (sf) | $6,787,000 |
Representations & Warranties Disclosure
All Nationally Recognized Statistical Rating Organizations are required, pursuant to SEC Rule 17g-7, to provide a description of a transaction’s representations, warranties and enforcement mechanisms that are available to investors when issuing credit ratings. KBRA’s disclosure for this transaction can be found in the report entitled Dividend Solar Loans 2017-1 Representations and Warranties.
Dividend Solar Loans 2017-1 Pre-Sale Report
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).
