Private Equity's Pandemic Bets Unravel as Normal Life Returns
By and Libby Cherry
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Welcome to The Brink. It's Giulia Morpurgo in London and Libby Cherry in Frankfurt, where we looked at the unraveling of pandemic bets. We also have news on UK universities, Sunnova and J&J. Follow this link to subscribe. Send us feedback and tips at debtnews@bloomberg.net.
In March 2020, the first coronavirus-induced lockdowns altered everyday life dramatically.
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KBRA Comments on Chapter 11 Filing of Sunnova Subsidiary and Reduction in Workforce
NEW YORK, June 06, 2025--(BUSINESS WIRE)--In an 8-K filing on June 5, 2025, Sunnova Energy Corporation (Sunnova)—the sponsor and originator of 24 residential solar loan and lease transactions rated by KBRA1 —disclosed that its wholly-owned subsidiary, Sunnova TEP Developer, LLC (Sunnova TEP), had filed a voluntary petition for relief under Chapter 11 of U.S. Bankruptcy Code. Sunnova also reported that its Board approved a reduction in force, effective May 30, 2025, of approximately 718 employees or 55% of its workforce. Given these developments, it is plausible that additional Sunnova subsidiaries— and potentially Sunnova itself—may seek bankruptcy protection in the near future. KBRA is currently monitoring the situation, as it maintains ratings on 54 classes of notes issued from the 24 solar ABS transactions totaling $6.0 billion. These transactions comprise 13 loan and 11 lease deals, for which Sunnova also serves as production guarantor and performance guarantor. Even if Sunnova were to file for bankruptcy, neither that event nor the bankruptcy of Sunnova TEP, in and of itself, would directly trigger a manager or servicer termination event within the ABS, as neither entity is designated as the transaction manager or servicer under the transaction documents. However, two wholly-owned subsidiaries of Sunnova, Sunnova ABS Management or Sunnova TE Management, LLC (collectively, Sunnova Management), act as transaction manager and/or servicer and are responsible for the administration, collection, and management services for the related ABS. If either of these entities were to file for bankruptcy, it could trigger a manager or servicer termination event. Furthermore, the controlling class noteholders, which generally comprise the most senior noteholders, could cause a termination event if they deem that the bankruptcy of Sunnova (or any of its subsidiaries) has impaired Sunnova Management's ability to perform its duties. Each transaction includes a transition manager, Computershare Trust Company or Wilmington Trust, NA, which is responsible for overseeing the performance of the transaction manager or servicer and assists in the transition to a replacement manager if a manager termination event were to occur. The securitizations also have a back-up servicer that can mitigate the risk of payment disruption during a servicer transfer. It is KBRA's understanding that Sunnova Management plans to remain transaction manager and/or servicer for each transaction, as applicable. Each issuer is a bankruptcy-remote entity with a first-priority perfected security interest in the collateral. If a servicer transition event were to occur, there is the potential for temporary cash flow disruption to the trust during the transition process. Should this occur, KBRA will consider the magnitude of the disruption, along with potential increases in delinquencies, as part of its ongoing monitoring efforts to determining whether Watch Placements and/or rating actions need to be effectuated. The tables below depict the performance of the outstanding solar loan and lease transactions as of the latest payment date reports, dated May 2025. To date, timely interest distributions have been made to each of the related notes since closing. _________________ 1 Includes published and unpublished transactions. KBRA-Rated(1) Sunnova Solar Loan Transactions Transaction Name Closing Date Pool Factor Months Seasoned Delinquency Rate Cumulative Net Loss Sunnova 2019-A Jun-19 60.8% 71 2.0% 5.0% Sunnova 2020-A Jun-20 65.5% 59 2.4% 5.2% Sunnova 2021-A Feb-21 72.5% 51 2.6% 4.7% Sunnova 2021-B Jul-21 76.6% 46 2.3% 4.9% Sunnova 2021-C Oct-21 78.8% 43 2.8% 4.9% Sunnova 2022-A Feb-22 80.3% 39 2.6% 5.0% Sunnova 2022-B Aug-22 83.4% 33 3.3% 5.2% Sunnova 2022-C Nov-22 83.8% 30 3.3% 4.9% Sunnova 2023-A May-23 88.2% 24 2.5% 2.3% Sunnova 2023-B Aug-23 88.5% 21 2.5% 2.2% Sunnova Hestia 2023-GRID1 Nov-23 89.0% 18 3.7% 3.4% Sunnova Hestia 2024-GRID1 Jun-24 93.1% 11 5.9% 2.8% 1Does not include private transactions with unpublished ratings. Note: For Sunnova 2019-A, on the October 2021 Distribution date, Sunnova repurchased approximately $3.8 million of defaulted loans. KBRA cumulative net loss (CNL) levels include the re-purchased loans. For Sunnova 2022-C, on the April 2023 Distribution date, Sunnova repurchased approximately $1.7 million of defaulted loans. KBRA CNL levels include the re-purchased loans. For Sunnova Hestia 2023-GRID1 and Sunnova Hestia 2024-GRID1, the Class 1-A Notes benefit from a Department of Energy (DOE) guarantee for principal and interest payments (see related commentary here). KBRA-Rated(1) Sunnova Solar Lease Transactions Transaction Name Closing Date Pool Factor Months Seasoned DSCR Cumulative Gross Default Sunnova 2018-1 Nov-18 83.9% 79 1.47 5.3% Sunnova 2020-1 Feb-20 88.9% 64 1.55 3.4% Sunnova 2020-2 Nov-20 91.8% 54 1.48 3.3% Sunnova 2021-1 Jun-21 89.7% 48 1.48 1.8% Sunnova 2022-1 Jun-22 94.0% 35 1.43 0.8% Sunnova 2023-1 Apr-23 98.3% 25 1.17 0.4% Sunnova 2024-1 Feb-24 99.8% 16 1.15 0.1% Sunnova 2024-2 Aug-24 100.7% 10 1.17 0.0% 1 Does not include private transactions with unpublished ratings. Related Publications KBRA Comments on Amendment to Sunnova's Loan Guarantee Agreement with DOE KBRA Monitoring Sunnova Transactions Following Going Concern Warning Sunnova Helios & Sunnova Hestia Solar Loan Backed Notes Comprehensive Surveillance Report Sunnova Comprehensive Surveillance Report About KBRA KBRA, one of the major credit rating agencies, is registered in the U.S., EU, and the UK. KBRA is recognized as a Qualified Rating Agency in Taiwan, and is also a Designated Rating Organization for structured finance ratings in Canada. As a full-service credit rating agency, investors can use KBRA ratings for regulatory capital purposes in multiple jurisdictions. Doc ID: 1009810 View source version on Contacts Melvin Zhou, Managing Director +1 Kenneth Martens, Managing Director +1 Business Development Contact Arielle Smelkinson, Senior Director +1 Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Business Wire
a day ago
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KBRA Comments on Chapter 11 Filing of Sunnova Subsidiary and Reduction in Workforce
NEW YORK--(BUSINESS WIRE)--In an 8-K filing on June 5, 2025, Sunnova Energy Corporation (Sunnova)—the sponsor and originator of 24 residential solar loan and lease transactions rated by KBRA 1 —disclosed that its wholly-owned subsidiary, Sunnova TEP Developer, LLC (Sunnova TEP), had filed a voluntary petition for relief under Chapter 11 of U.S. Bankruptcy Code. Sunnova also reported that its Board approved a reduction in force, effective May 30, 2025, of approximately 718 employees or 55% of its workforce. Given these developments, it is plausible that additional Sunnova subsidiaries— and potentially Sunnova itself—may seek bankruptcy protection in the near future. KBRA is currently monitoring the situation, as it maintains ratings on 54 classes of notes issued from the 24 solar ABS transactions totaling $6.0 billion. These transactions comprise 13 loan and 11 lease deals, for which Sunnova also serves as production guarantor and performance guarantor. Even if Sunnova were to file for bankruptcy, neither that event nor the bankruptcy of Sunnova TEP, in and of itself, would directly trigger a manager or servicer termination event within the ABS, as neither entity is designated as the transaction manager or servicer under the transaction documents. However, two wholly-owned subsidiaries of Sunnova, Sunnova ABS Management or Sunnova TE Management, LLC (collectively, Sunnova Management), act as transaction manager and/or servicer and are responsible for the administration, collection, and management services for the related ABS. If either of these entities were to file for bankruptcy, it could trigger a manager or servicer termination event. Furthermore, the controlling class noteholders, which generally comprise the most senior noteholders, could cause a termination event if they deem that the bankruptcy of Sunnova (or any of its subsidiaries) has impaired Sunnova Management's ability to perform its duties. Each transaction includes a transition manager, Computershare Trust Company or Wilmington Trust, NA, which is responsible for overseeing the performance of the transaction manager or servicer and assists in the transition to a replacement manager if a manager termination event were to occur. The securitizations also have a back-up servicer that can mitigate the risk of payment disruption during a servicer transfer. It is KBRA's understanding that Sunnova Management plans to remain transaction manager and/or servicer for each transaction, as applicable. Each issuer is a bankruptcy-remote entity with a first-priority perfected security interest in the collateral. If a servicer transition event were to occur, there is the potential for temporary cash flow disruption to the trust during the transition process. Should this occur, KBRA will consider the magnitude of the disruption, along with potential increases in delinquencies, as part of its ongoing monitoring efforts to determining whether Watch Placements and/or rating actions need to be effectuated. The tables below depict the performance of the outstanding solar loan and lease transactions as of the latest payment date reports, dated May 2025. To date, timely interest distributions have been made to each of the related notes since closing. Related Publications About KBRA KBRA, one of the major credit rating agencies, is registered in the U.S., EU, and the UK. KBRA is recognized as a Qualified Rating Agency in Taiwan, and is also a Designated Rating Organization for structured finance ratings in Canada. As a full-service credit rating agency, investors can use KBRA ratings for regulatory capital purposes in multiple jurisdictions. Doc ID: 1009810
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3 Terrible Companies To Lose $5 Billion in Federal Green Energy Loans
In the last days of the Biden administration, the Energy Department dolled out billions of dollars for politically favored green energy projects. The Trump administration is looking to claw this funding back. The Energy Department is getting ready to "cancel seven major loans and loan guarantees that had been conditionally approved under the Biden administration," reports Semafor. This action will cancel approximately $5 billion worth of funding for a transmission project by a New Jersey utility company, a loan program for low-income homeowners to install rooftop solar panels by Sunnova, and a Monolith Nebraska factory to produce low-carbon ammonia. The remaining four projects, which collectively received over $3 billion, include three battery factories and a plastics and recycling facility, which "were already previously cancelled by their companies because of other various headwinds," according to Semafor. The three active projects that will have their federal loans axed have faced their own share of problems. In September 2023, Sunnova received a $3 billion partial loan guarantee from the Energy Department's Loan Programs Office (LPO) for Project Hestia—a program that would make residential rooftop solar, battery storage, and virtual power plants "available to more American homeowners." Hestia was expected to provide loans to as many as 115,000 homeowners in the United States and Puerto Rico for these technologies, while creating "3,400 good-paying, high-quality American jobs." After receiving the federal loan, Sunnova came under fire for its alleged history of predatory practices and scamming elderly clients, which led to subsequent congressional scrutiny. In April, Sunnova began filing for bankruptcy. The company recently said it was no longer planning to use the programming funding and was working with the Energy Department to return the remaining guarantees. Monolith received a $953 million conditional loan guarantee from the LPO to accelerate its clean hydrogen and carbon utilization project in Nebraska. The company, which has received backing from BlackRock and NextEra Energy and was valued at over $1 billion in 2022, creates hydrogen fuel with renewable energy (which can be used to make ammonia in fertilizers) and carbon black. Despite the federal funding and private sector support, The Wall Street Journal reported in September 2024 that the company was "running short on cash and facing project delays." The third project facing the ax is New Jersey's Clean Energy Corridor, "a project to upgrade and expand transmission infrastructure to accommodate planned generation in New Jersey to meet growing electricity demand." Run by Jersey Central Power & Light Company, the project received a conditional loan guarantee of up to $716 million in January to support the state's goal of "introducing 11,000 MW of offshore wind-generated electricity by 2035." When First Energy, which owns Jersey Central, first announced the project in 2022, Danish energy company Orsted was planning two large wind projects off New Jersey's coast. The projects were canceled in 2023. Another New Jersey offshore wind project was recently halted after the Environmental Protection Agency rescinded the project's environmental permits. Despite these project cancellations and the LPO's history of questionable and risky investments, it does not appear that the office is going away soon; Energy Secretary Chris Wright recently told lawmakers that his agency would use the LPO to advance nuclear energy projects. Assuming Wright fully cuts billions of dollars worth of wasteful projects and narrows the agency's scope to only fund nuclear power projects, it's possible that the LPO's budget—which ballooned to over $400 billion under the Biden administration—could meaningfully shrink. Still, a meaningfully reduced budget is not enough. With the national deficit climbing to over $28 trillion in debt held by the public, taxpayers can no longer afford to support the federal government's fantasy that it should be a green bank. The post 3 Terrible Companies To Lose $5 Billion in Federal Green Energy Loans appeared first on Sign in to access your portfolio
