KBRA Monitoring Sunnova Transactions Following Going Concern Warning

On March 3, 2025, Sunnova Energy Corporation (Sunnova) stated in its fourth quarter and full-year 2024 financial results that there is substantial doubt about its ability to continue as a going concern for at least one year without implementing additional capital management measures. To address this, Sunnova is looking to take a number of steps to increase the amount of available cash and reduce expenses. It has also hired a financial advisor to manage certain aspects of their debt management and refinancing efforts.

KBRA currently maintains ratings on 30 classes of notes issued from 12 solar loan ABS transactions totaling $2.6B of initial principal balances and on 21 classes of notes issued from 11 solar lease ABS transactions totaling $3.2B of initial principal balances where Sunnova is the sponsor. For all of these solar ABS transactions, Sunnova is also the originator, production guarantor and performance guarantor.

Sunnova TE Management, LLC or Sunnova ABS Management, LLC (Sunnova Management), each a wholly-owned subsidiary of Sunnova, act as the transaction manager and/or servicer, responsible for administrative, collection, and management services. While Sunnova's bankruptcy alone would not directly trigger a manager or servicer termination event within the ABS, it could if Sunnova Management also files for bankruptcy and directed by the controlling class noteholders. Each transaction includes a transition manager, Computershare Trust Company or Wilmington Trust, N A, 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 was to occur. In addition, the transactions each have a back-up servicer that can mitigate risk of payment disruption during a servicer transfer.

KBRA will continue to monitor the developments and implications of Sunnova’s financial health, as well as possible manager transitions and performance of the Sunnova transactions.

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.

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