Ygrene Energy Fund issues $184 million public and $145 million private securitization deals
Written By: Stratton Report
November 15, 2016
On November 15, PACE financier Ygrene Energy Fund, Inc.announced a $184 million public securitization with the industry’s first AAA rated PACE assets and the completion of a $145 million private securitization transaction with insurer Global Atlantic Financial Group.
Per Ygrene, the public securitization was designated Green Bond-1 by Moody’s Investor Services. It included $179.482 million in class A notes and $4.995 million in class B notes, with the A and B notes rated AAA and A by Morningstar and AA and BBB by Kroll, respectively. The collateral pool was comprised of residential and commercial assets from over 6,000 California properties and over 1,500 Florida properties, demonstrating the first public securitization to encompass multiple states as well as property types.
Rasool Alizadeh, Ygrene’s Senior Director of Capital Markets & Asset Backed Securities commented: “We saw exceptional demand for this deal, with both A and B notes being oversubscribed. The diversity of our product offering and geographies helped attract a broad range of investors that we look forward to working with as we expand this asset class.”
“We saw exceptional demand for this deal, with both A and B notes being oversubscribed. The diversity of our product offering and geographies helped attract a broad range of investors that we look forward to working with as we expand this asset class.”
The two-tranche deal, Ygrene’s first public securitization and third overall, according to the firm achieved a noteworthy 99.7% advance rate, adding to Ygrene’s capital liquidity as the company plans to launch in at least two new states next year.
The ABS was structured in conjunction with Deutsche Bank Securities, Inc. and syndicated out to a broad group of investors comprised of asset managers and large insurance companies.
Kevin Tanzer, Managing Director at Deutsche Bank remarked: “PACE has gained critical traction over the past few years, and we’re pleased to work with industry leaders like Ygrene to advance this valuable asset class.
Michael Chan, CFO of Ygrene Energy Fund pointed out: “Achieving the first AAA rating speaks to Ygrene’s novel product offering, and the propitious future of PACE assets,” said. “The structure of this deal can serve as a model for the PACE industry as it matures.”
The private securitization transaction consisted of $145 million in privately rated Class A notes.
According to Ygrene, the private transaction is the company’s second securitization to combine both residential and commercial assets in multiple states, including California and Florida. The firm stressed that this securitization funded approximately 6,041 energy and water conservation projects, which will provide home and business owners with over $290 million in estimated savings on energy and water bills.
Ygrene CEO, Stacey Lawson noted: “We are excited to complete our second private PACE securitization with Global Atlantic. By combining residential and commercial assets in multiple states, we are able to offer a powerful tool that will help property owners across the country save energy and money, communities meet their environment goals and create local jobs, and ensure a high quality return for investors.”
Michael Chan, Ygrene CFO remarked: “The successful closing of this securitization, along with the high rating and advance rate, reinforces the growing understanding by ratings agencies and investors of the strength and security of the PACE asset class. It’s a very exciting time for Ygrene and the PACE industry as a whole. I expect this trend to continue as we build strong, long term relationships with strategic investors.”