(Bloomberg) -- Europe’s public debt market is set to get its first sale of a bond backed by solar-panel loans.
Germany’s Enpal is talking to investors today to market a deal backed by €240 million ($259 million) in German consumer loans created to purchase and install solar panels, according to a person familiar with the matter, who asked not to be identified because the information is private. The securitization deal will be via a special purpose vehicle called Golden Ray 1, and is expected to price next week, they said.
Securitization — the pooling and repackaging of loans into new financial securities — is widespread among US renewables companies. It’s seen as a way to drive adoption of solar panels by lowering upfront financing costs for consumers, while reducing balance-sheet risks for companies. Securitization deals are also common among Europe’s mortgage lenders and automakers, but a public deal hasn’t yet been attempted by a renewables company in the region.
Enpal’s deal will lay the groundwork for other issuers as investors will get to know the asset class, according to Cas Bonsema, an analyst at Rabobank. “If well received, it could encourage other issuers that the public ABS market is a viable source of financing solar panel assets,” he said.
SoftBank Group Corp.-backed Enpal has already had success with private deals. Last year, the German firm raised €356 million in debt commitments from Citigroup Inc. and M&G Plc for a residential solar securitization product.
The Berlin-headquartered company was founded in 2017 and provides homeowners with renewable energy systems such as solar panels, battery storage and electric car charging stations, together with a finance offering covering the upfront cost of installation. It’s the largest provider of solar solutions for homeowners in Europe, with more than 80,000 customers, the person familiar said. Sales topped €900 million in 2023, according to its latest annual report.
“The securitization sets a new benchmark for the industry that will help accelerate the energy transition by making renewable energy more accessible to homeowners,” Gregor Burkart, head of refinancing at Enpal, said in an emailed statement. “Investors can tap into a growing market driven by Europe’s renewable energy targets,” he added.
The company earlier this year lined up €1.1 billion in bank commitments from Barclays Plc, Bank of America, Credit Agricole CIB and pension fund CPP Investments to fund loans to homeowners for solar panels and heat pumps, paving the way for marketing the asset-backed securities to a broader investor base.
The €240 million amortizing loans in the Golden Ray 1 portfolio have an average remaining term of 24.6 years, according to the person familiar.
(Adds quote from Enpal in seventh paragraph.)
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