DBRS Morningstar Assigns Provisional Ratings to CLEAN PACE 2022-1 LLC

DBRS, Inc. (DBRS Morningstar) assigned provisional ratings to the notes to be issued by CLEAN PACE 2022-1 LLC (the Issuer or the Transaction) as follows:

-- $65,701,000 Class A rated AAA (sf)
-- $2,032,000 Class B rated AA (sf)
-- $2,641,000 Class C rated BBB (sf)

The ratings are based on DBRS Morningstar’s review of the following considerations:
-- Transaction capital structure, proposed ratings, and form and sufficiency of available credit enhancement.
-- Credit enhancement in the form of a subordinated note, liquidity reserve, and excess spread.
-- Credit enhancement levels sufficient to support the DBRS Morningstar-expected delinquency and loss severity assumptions under various stress scenarios.
-- The ability of the Transaction to withstand stressed cash flow assumptions and repay investors according to the terms under which they have invested.
-- The capabilities of CleanFund and PEQ with regard to originations and underwriting.
-- DBRS Morningstar performed an operational review of Investor Mortgage Finance LLC and PEQ and considers both the companies acceptable Portfolio Administrators of property assessed clean energy (PACE) assessments.
-- The legal structure and presence of legal opinions that will address the true sale of the Portfolio Certificates to the Issuer, the nonconsolidation of the Issuer with the Transferor, that the Issuer has a valid first-priority security interest in the Portfolio Certificates, and the consistency with DBRS Morningstar’s Legal Criteria for U.S. Structured Finance.
-- Review of legal considerations specific to PACE.
-- Servicing is performed by local county tax collection offices.
-- The transaction assumptions consider DBRS Morningstar’s baseline macroeconomic scenarios for rated sovereign economies, available in its commentary “Baseline Macroeconomic Scenarios For Rated Sovereigns: June 2022 Update,” published on June 29, 2022. These baseline macroeconomic scenarios replace DBRS Morningstar’s moderate and adverse Coronavirus Disease (COVID-19) pandemic scenarios, which were first published in April 2020.

ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factor(s) that had a significant or relevant effect on the credit analysis.

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/396929/dbrs-morningstar-criteria-approach-to-environmental-social-and-governance-risk-factors-in-credit-ratings.

Notes:
All figures are in in U.S. dollars unless otherwise noted.

The principal methodology is Rating U.S. Property Assessed Clean Energy (PACE) Securitizations (May 24, 2022), which can be found on dbrsmorningstar.com under Methodologies & Criteria.

The DBRS Morningstar Sovereign group releases baseline macroeconomic scenarios for rated sovereigns. DBRS Morningstar analysis considered impacts consistent with the baseline scenarios as set forth in the following report: https://www.dbrsmorningstar.com/research/384482/baseline-macroeconomic-scenarios-application-to-credit-ratings.

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

Please see the related 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.dbrsmorningstar.com or contact us at [email protected].

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