SolarCity Launches S&P Rated Bonds, Plans to Raise $54M

Standard & Poor’s has given a preliminary endorsement for a set of notes meant to raise $54.4 million for solar installation company, SolarCity, the New York Times reports.

But instead of car loans, life insurance policies and future royalties from famous musicians serving as the assets to back bonds sold by Wall Street, the SolarCity bonds will be backed by solar electricity payments, according to the NYT.

SolarCity intends to sell the bonds privately to a small group of institutional investors this month, with the offering being managed by Credit Suisse. They will carry S&P low investment-grade BBB+ rating and yield 4.8%. The firm will use the money to expand its status as a leading solar systems installer in the U.S. It declined to comment to the NYT.

Andrew Giudici, a senior director of Kroll Bond Ratings, says new financing sources are urgently needed for the solar energy industry. That’s because come the end of 2016, the federal tax credit for solar energy projects will drop from 30% to 10%.

“Actually getting the first deal done will hopefully open up different outlets for other developers as well,” Giudici told the NYT.

To read the New York Times article cited in this story, click here

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