'Green' Bonds Set Record With $305M Issue

Wall Street Bull

Renovate America issued $305.3M as part of a securitization of Property Assessed Clean Energy (PACE) bonds, the provider reported yesterday. This was the largest such securitization on record and suggests the market for "green" asset backed securities has become a substantial force in boosting the energy-efficiency profile of homeowners and participating communities.

The deal was the seventh such transaction for Renovate America and was rated AA (sf) by Kroll and DBRS. Renovate America CEO J.P. McNeill pointed to strong investor interest for the issuance. He added this was the first time international investors were eager to join.

PACE financing was born in Berkeley as a project of Cisco DeVries, chief of staff for then-Mayor Tom Bates. Property owners are frequently prevented from installing clean energy upgrades such as solar panels due to the high installation costs and the long time for an upgrade project to realize a meaningful return. PACE covers the full cost of the upgrade while the owner pays for the project over time through an additional assessment payment (property tax).

The program has grown over the years to cover seismic retrofits and other resiliency programs.

"Investor interest [in PACE bonds] is growing with each issuance because the bonds provide significant relative value versus bonds of similar credit and duration," said Renovate America SVP for capital markets Adam Garfinkle. "Our core investor base remains solid, and we add new investors with each transaction."

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