KBRA Assigns Preliminary Ratings to E3 2019-1, Series 2019-1

NEW YORK–(BUSINESS WIRE)–Kroll Bond Rating Agency (KBRA) assigns a preliminary rating to three classes of notes from E3 2019-1, Series 2019-1 (“E3 2019-1”). The notes are newly issued asset-backed securities backed by a portfolio of Property Assessed Clean Energy (“PACE”) Bonds.

The Class A Notes, Class B Notes, and Class C Notes (together, the “Notes”) are secured by a portfolio of PACE assets (“PACE Bonds”) acquired by E3 2019-1 (the “Issuer”) at closing (the “Initial PACE Bonds”) and during the Prefunding Period (the “Subsequent PACE Bonds” and together with the Initial PACE Bonds, the “PACE Bond Portfolio”). The PACE Bonds consist of limited obligation improvement bonds issued or to be issued by the California Municipal Finance Authority (“CMFA”) via the California Municipal Finance Authority PACE Program, and by California Statewide Communities Development Authority (“CSCDA”), via the CSCDA Open PACE Program (together with California Municipal Finance Authority PACE Program, the “PACE Programs”). The Initial PACE Bonds are secured by 3,166 PACE assessments levied against 3,152 residential properties and 14 commercial properties (“PACE Assessments”) in eighteen California counties (a total of 46 California counties are approved under the two PACE Programs). The average PACE Assessment is approximately $33,717 with an average annual payment of approximately $3,368. The transaction benefits from credit enhancement in the form of excess spread, a liquidity reserve account, and in the case of the Class A Notes, subordination.

KBRA has analyzed this transaction using the U.S. Property Assessed Clean Energy (PACE) ABS Rating Methodology published on June 1, 2018 and the Global Structured Finance Counterparty Methodology published on August 8, 2018. The key determinants considered in the rating outcome are: a structural and legal analysis of the transaction; the treatment of PACE assessments as special assessments having lien priority on par with senior tax liens; and the creditworthiness of the counties acting as servicers.

KBRA believes the transaction benefits from sufficient credit enhancement and a structure that accelerates principal payments to the rated Notes upon weakening asset performance. In addition, KBRA views the eligibility requirements, especially the low LTV of the PACE assessment, as a positive credit consideration for this transaction.



Initial Principal Balance

Class A Notes

AAA (sf)


Class B Notes

A (sf)


Class C Notes

BBB (sf)


To access ratings, reports and disclosures, click here.

Related Publications: (available at www.kbra.com)




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About KBRA and KBRA Europe

KBRA is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider, and is a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.



Cecil Smart, Jr., Managing Director

(646) 731-2381


Usman Khan, Associate Director

(646) 731-2488


Abby Barkwell, Associate Director

(646) 731-3304


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