Renovate America, a leading provider of home improvement financing, today announced the closing of its eleventh securitization of HERO Property Assessed Clean Energy (PACE) green bonds.
The securitization, HERO Funding 2017-2, included $182 million of class A1 and A2 notes rated AAA by Morningstar, AA (sf) by Kroll and AA (sf) by DBRS, and $23 million of class B notes rated BBB (sf) by DBRS. The deal was well-subscribed, and strong demand meant Renovate America was able to expand its investor base. The 10 new investors in HERO bonds represent a diverse mix of buyers, comprising European accounts, pension plans, and dedicated green bond funds.
With this securitization, Renovate America has now attracted over $2.5 billion in funds from global capital markets to invest in energy and efficiency improvements that are benefiting local homeowners and their communities. The projects backed by the bonds in HERO Funding 2017-2 are expected to lower homeowners’ water and energy bills by more than $221 million over the useful lifetime of the products installed. Projects covered by this securitization are also estimated to have created more than 1,500 jobs.
“It’s a gratifying honor to be able to mobilize capital from around the world in the service of helping American homeowners save energy and water while also creating jobs,” said Renovate America Head of Investor Relations Nicole Montecalvo.
The notes are initially secured by HERO PACE assessments levied on 6,080 residential properties in 39 California counties. The initial PACE assessments have an average balance of approximately $22,477, a weighted annual interest rate of 7.32 percent and a weighted-average original term of 17.4 years. The underlying bonds in the initial pool were originated between May 10 and July 14 of this year.
The HERO bond platform is the largest asset-backed securities platform to solely produce green bonds, with each of the company’s eleven securitizations having been designated as green by Sustainalytics, an investment research firm specialized in environmental, social and governance (ESG) research and analysis. HERO bonds also adhere to the Green Bond Principles, a set of commonly agreed standards in the capital markets on what constitutes a green bond.
HERO green bonds have received significant interest, in part, because they do not fund aspirational or speculative projects; the proceeds have already been invested in residential energy efficiency, renewable energy, and water efficiency projects whose environmental impact is verified.