Sunrun secures $600m to back a 335 MW portfolio of leases and PPAs

Sunrun said it closed a $600 million non-recourse syndicated bank facility supporting a 335 MW portfolio of leases and power purchase agreements. 

The Senior Credit Facilities consist of a $575 million amortizing loan and a $25 million debt service reserve letter of credit. 

The company said it also closed an additional non-recourse subordinated financing, which is secured by Sunrun’s retained equity interest in the underlying collateral supporting the Senior Credit Facilities. The facilities closed in late December.

KeyBanc Capital Markets and Silicon Valley Bank acted as coordinating lead arrangers for the Senior Loan transaction. RBC Capital Markets served as exclusive placement agent for the subordinated financing.

The $575 million Senior Loan was priced at a credit spread of around 212.5 basis points to the Daily Simple Secured Overnight Financing Rate, with a 12.5 basis points margin step-up on the fourth anniversary of the closing date. (SOFR is the successor to the London Interbank Offered Rate known as LIBOR).  

Concurrent with closing, the subsidiary borrower entered into long-term amortizing fixed-for-floating interest rate swaps, providing a weighted-average fixed base rate of 3.49%, and a total initial swapped Senior Loan cost of debt of 5.62%. 


Sunrun said the 212.5 basis points credit spread is around 100 basis points lower than the weighted average AA- and A- credit spreads for two fourth quarter solar loan asset-backed securitizations issued by others in the sector. 

The $25 million DSR LC is undrawn and was placed in lieu of a cash-funded debt service reserve account. The Senior Credit Facilities were more than 1.50x oversubscribed among a syndicate of nine lenders and represents the largest senior tranche for a term financing since Sunrun’s inception. The Senior Loan is structured to support amortization over the life of the assets and has a final maturity date of Dec. 23, 2029. 

Sunrun also raised a $235 million non-recourse subordinated financing, which increased the cumulative advance rate obtained by Sunrun. The company said the cost of the non-recourse subordinated financing was consistent with its existing subordinated debt financing facilities. 

Sunrun said that taking together tax equity proceeds and other upfront cash flows, including upfront rebates and customer prepayments, the Senior Loan and the subordinated financing, Sunrun realized proceeds, net of transaction fees, that represent more than 85% of the contracted Subscriber Value associated with the assets in the transaction, measured using a 5% discount rate. 

It said the Senior Loan and subordinated financing will be funded in two draws, with the first draw having already occurred upon closing in December. The second draw is expected to occur in the first quarter concurrent with the addition of a tax equity fund currently debt-financed in Sunrun’s revolving warehouse facility.

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Author: Renewable Energy World