DBRS Removes from Under Review, Upgrades and Confirms 21 PACE Securities

DBRS, Inc. (DBRS) removed from Under Review with Positive Implications 21 securities issued by ten transactions backed by property assessed clean energy (PACE) bonds (the PACE Bonds). Of the securities removed from Under Review, 15 were upgraded to AAA (sf), one was upgraded to AA (sf) and five were confirmed at their current respective rating levels. Performance for the securities reviewed is within DBRS expectations, and credit enhancement levels are sufficient to cover DBRS’s loss expectations at the upgraded or confirmed rating levels.

The transactions were placed Under Review with Positive Implications on May 10, 2018, as a result of industry and regulatory developments affecting the origination and underwriting of PACE assessments, which back the transactions being removed from Under Review. These developments are expected to have a positive impact on the credit profile of asset-backed security transactions backed by PACE Bonds.

The transactions reviewed include the following:

-- HERO Funding 2016-3
-- HERO Funding 2016-4
-- HERO Funding 2017-1
-- HERO Funding 2017-2
-- HERO Funding 2017-3
-- HERO Funding Trust 2015-3
-- HERO Funding Trust 2016-1
-- HERO Funding Trust 2016-2
-- Renew 2017-1
-- Renew 2017-2

The ratings are based on DBRS’s review of the following analytical considerations:

-- Transaction capital structure, proposed ratings and form and sufficiency of available credit enhancement.
-- The transaction parties’ capabilities with regard to origination, underwriting and servicing.
-- The credit quality of the collateral pool and historical performance.

On December 20, 2018, this press release was amended to remove language that inadvertently stated the ratings were based on amendments made to the transaction.

Notes:
The principal methodology is the DBRS Master U.S. ABS Surveillance Methodology, which can be found on dbrs.com under Methodologies.

The rated entity or its related entities did participate in the rating process. DBRS had access to the accounts and other relevant internal documents of the rated entity or its related entities.

Please see the attached appendix for additional information regarding the sensitivity of assumptions used in the rating process.

For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.