DBRS Morningstar Confirms Ratings on PACEfunding 2020-1

DBRS, Inc. (DBRS Morningstar) confirmed its ratings on all classes of securities included in the PACEfunding 2020-1 transaction.

The rating confirmations are based on the following analytical considerations:

-- The transaction assumptions consider DBRS Morningstar’s baseline macroeconomic scenarios for rated sovereign economies, available in its commentary “Baseline Macroeconomic Scenarios for Rated Sovereigns: December 2022 Update,” published on December 21, 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.

-- Transaction capital structure, current ratings, and sufficient credit enhancement levels.

-- The transaction benefits from credit enhancement in the form of overcollateralization, a reserve account, and excess spread. The senior notes also benefit from subordination from the lower classes, if applicable.

-- Collateral performance is within expectations with no triggers in effect. Delinquency levels remain stable.

-- The transaction parties’ capabilities with regard to origination, underwriting, and servicing.

-- The ratings address the payment of timely interest on a semi-annual basis and the payment of principal by their scheduled maturities. Residential property assessed clean energy (R-PACE) assessments are paid at the same priority as property taxes.

-- Legal considerations specific to property assessed clean energy (PACE), including validity in all relevant jurisdictions. The obligation to pay the PACE assessments is transferable. When a property is sold, the new owner is responsible for any outstanding PACE assessments and payment penalties as part of the purchase of the property. Additionally, protections are afforded to special revenue collections under Chapter 9 of the U.S. Bankruptcy Code and certain structural features, including a County Reserve Account, mitigate commingling risks associated with the servicing of PACE assessments by local county tax collection offices.

ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factors 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 (May 17, 2022).

Notes:
The principal methodology applicable to the ratings is DBRS Morningstar Master U.S. ABS Surveillance (February 6, 2023; https://www.dbrsmorningstar.com/research/409444).

Other methodologies referenced in this transaction are listed at the end of this press release. These may be found at: https://www.dbrsmorningstar.com/about/methodologies.

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.

The rated entity or its related entities did not 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.

DBRS, Inc.
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New York, NY 10005 USA
Tel. +1 212 806-3277

The rating methodologies used in the analysis of this transaction can be found at: https://www.dbrsmorningstar.com/about/methodologies.

Operational Risk Assessment for U.S. ABS Servicers (February 6, 2023)
https://www.dbrsmorningstar.com/research/409447/operational-risk-assessment-for-us-abs-servicers
Operational Risk Assessment for U.S. ABS Originators (November 8, 2022)
https://www.dbrsmorningstar.com/research/405082/operational-risk-assessment-for-us-abs-originators
Legal Criteria for U.S. Structured Finance (December 7, 2022)
https://www.dbrsmorningstar.com/research/407008/legal-criteria-for-us-structured-finance
Rating U.S. Structured Finance Transactions (February 6, 2023)
https://www.dbrsmorningstar.com/research/409449/rating-us-structured-finance-transactions
Rating U.S. Property Assessed Clean Energy (PACE) Securitizations (May 24, 2022)
https://www.dbrsmorningstar.com/research/397234/rating-us-property-assessed-clean-energy-pace-securitizations

For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at [email protected].