Securitisation may be a “viable option” for solar photovoltaic (PV) developers, says rating agency Standard & Poor’s (S&P), but it has set out a list of concerns that are likely to prove daunting to structurers and credit ratings firms.

“As the US solar power industry continues to expand, developers will need various financing outlets to fund their growth,” S&P says in a note lead-authored by Andrew Giudici, a New York-based primary credit analyst at the company. “Such transactions could provide the issuers’ parents with a significant amount of upfront cash for capital spending or other business ventures.”

Securitisation involves aggregating a pool of assets or financial contracts, against which bonds are sold, with their future cashflows used to pay the bondholders’ interest and repay the principal. The bondholder typically has recourse to the underlying assets in case of default.

via Environmental Finance | News | S&P sets out solar securitisation challenges.

Link to report here.