Morningstar DBRS Confirms Credit Ratings on PACEFunding 2020-1 Notes Transaction

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

CREDIT RATING RATIONALE/DESCRIPTION

-- Transaction capital structure, current credit ratings, and available credit enhancement.

-- The transaction benefit from credit enhancement in the form of overcollateralization, a liquidity reserve account, and excess spread. The senior notes also benefit from subordination from the lower classes, where applicable. The credit enhancement levels have increased for all outstanding classes across all transactions.

-- For the Class A notes, the credit ratings address the payment of timely interest and the payment of principal by their scheduled maturities. For the Class B and C notes, the credit ratings are based on ultimate payment of interest and ultimate payment of principal by their scheduled maturities.
--PACE Assessments have equal-lien priority with such property taxes or other special taxes/assessments secured by the same property.

-- Legal considerations specific to property assessed clean energy (PACE) assessments, including validity in all relevant jurisdictions. The obligation to pay the PACE assessments is transferable. Residential PACE assessments are paid at the same priority as property taxes. 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.

-- The transaction assumptions consider Morningstar DBRS' baseline macroeconomic scenarios for rated sovereign economies, available in its commentary, "Baseline Macroeconomic Scenarios For Rated Sovereigns: December 2024 Update," published on December 19, 2024. These baseline macroeconomic scenarios replace Morningstar DBRS' moderate and adverse coronavirus pandemic scenarios, which were first published in April 2020.

Morningstar DBRS' credit ratings on Class A, Class B, and Class C addresses the credit risk associated with the identified financial obligations in accordance with the relevant transaction documents. Where applicable, a description of these financial obligations can be found in the transactions' respective press releases at issuance.

ENVIRONMENTAL, SOCIAL, AND 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 Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (August 13, 2024) https://dbrs.morningstar.com/research/437781.

Notes:
The principal methodology applicable to the credit ratings is Morningstar DBRS Master U.S. ABS Surveillance (January 10, 2025) https://dbrs.morningstar.com/research/445740.

Other methodologies referenced in this transaction are listed at the end of this press release.

The credit rating was initiated at the request of the rated entity.

The rated entity or its related entities did participate in the credit rating process for this credit rating action.

Morningstar DBRS had access to the accounts, management and other relevant internal documents of the rated entity or its related entities in connection with this credit rating action.

This is a solicited credit rating.

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

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

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

-- Operational Risk Assessment for U.S. ABS Originators and Servicers (December 05, 2024),
https://dbrs.morningstar.com/research/444162
-- Legal Criteria for U.S. Structured Finance (December 03, 2024),
https://dbrs.morningstar.com/research/444064
-- Rating U.S. Structured Finance Transactions (March 10, 2025),
https://dbrs.morningstar.com/research/449616
-- Rating U.S. Property Assessed Clean Energy (PACE) Securitizations (August 06, 2024)
https://dbrs.morningstar.com/research/437561

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