Securitization, the holy grail of energy efficiency finance, has finally arrived in the commercial sector.
Connecticut’s green bank, the Clean Energy and Finance Authority (CEFIA), today announced a deal to bundle and sell a sizable chunk of its C-PACE loan portfolio to the specialty finance company Clean Fund. The bonds, issued by the Public Finance Authority, are backed by $30 million of commercial PACE loans funding energy efficiency in commercial buildings in the state of Connecticut.
This transaction represents the first known securitization of commercial energy-efficiency loans, and it may be the event that finally unlocks institutional capital for efficiency finance. The deal comes a couple of months after the first in California.
Clean Fund has agreed to purchase $24 million of a $30 million bond issuance, with CEFIA holding on to the remaining $6 million of bonds as a first loss position. The commercial assets included in the securitization represent a diversified portfolio of property owners funded through a $40 million CEFIA warehouse program, including a major commercial office building in Middletown, a YMCA in Danbury, and a strip mall in Norwalk. The portfolio also features 750 kW of solar PV systems.