Spruce Completes Largest Securitization of Unsecured Residential Efficiency Loans in the U.S.
Spruce Finance Inc. (“Spruce”), a technology-enabled provider of consumer financing for residential solar and home efficiency improvements, recently closed the largest securitization of unsecured residential energy efficiency loans and retail installment contracts in the U.S. In the transaction, Spruce placed two tranches totaling $83.78 million pursuant to Rule 144A. The Class A notes have a coupon of 4.32% and are expected to be repaid by 2022; the Class B notes have a coupon of 6.90% and are expected to be repaid by 2023.
The Class A notes received a rating of ‘A’ and the Class B Notes received a rating of ‘BBB’ from Kroll Bond Rating Agency Inc.
“Spruce is growing financing volume more than 50 percent across both its home efficiency and residential solar business lines,” said Spruce CEO Nat Kreamer. “This securitization is the start of our program that will routinely offer efficiency and solar asset-backed securities to qualified investors and support long-term access to capital.”
Spruce’s efficiency lending business was established in 1974 and has provided origination, underwriting and financing for efficiency loans for Fannie Mae and several U.S. electric utility companies. Spruce has a uniquely deep pool of proprietary consumer finance and repayment data that offers important insight into how these assets perform.
“We are proud to partner with Spruce Finance to significantly expand the market for asset-backed securities backed by consumer energy efficiency loans,” said Marshal Salant, global head of alternative energy finance at Citi. “This transaction clearly shows the growing interest among investors in this new asset class. We look forward to continuing our work with Spruce to make financing for residential energy efficiency improvements available to even more U.S. homeowners.”
Citi acted as sole structuring agent and sole bookrunner for the transaction (Spruce ABS Trust 2016-E1).
Spruce has raised more than $2 billion, including tax equity, debt, and corporate equity, from Fortune 100 corporations, power companies and major Wall Street banks. Spruce uses a proprietary technology platform to offer its national network of verified channel and contractor partners a comprehensive suite of residential solar and home efficiency finance products for consumers.
“Our ability to efficiently originate high-quality assets through our channel and our proprietary consumer data and analytics are key differentiators for Spruce,” said Kreamer.