DBRS Morningstar Finalizes Provisional Ratings on Renew 2021-1

DBRS, Inc. (DBRS Morningstar) finalized its provisional ratings on the following classes of notes issued by Renew 2021-1 (the Issuer):

-- $134,347,000 Class A Notes at AAA (sf)
-- $4,155,000 Class M Notes at AA (sf)
-- $19,362,000 Class B Notes at BBB (sf)

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

-- Coronavirus Disease (COVID-19). The analysis incorporated the impact of the coronavirus as follows: The transaction assumptions consider DBRS Morningstar’s set of macroeconomic scenarios for select economies related to the coronavirus available in its commentary “Global Macroeconomic Scenarios: March 2021 Update,” published on March 17, 2021. DBRS Morningstar initially published macroeconomic scenarios on April 16, 2020, which have been regularly updated. The scenarios were last updated on March 17, 2021, and are reflected in DBRS Morningstar's rating analysis.
-- The assumptions consider the moderate macroeconomic scenario outlined in the commentary, with the moderate scenario serving as the primary anchor for current ratings. The moderate scenario factors in increasing success in containment during the first half of 2021, enabling the continued relaxation of restrictions. To account for the potential additional borrower stress, DBRS Morningstar applied adjustments consistent with the moderate scenario in its analysis of the transaction portfolio’s probability of delinquencies.
-- Transaction capital structure, proposed ratings, and form and sufficiency of available credit enhancement.
-- Credit enhancement is in the form of subordination, a liquidity reserve, and excess spread. Credit enhancement levels are sufficient to support the DBRS Morningstar-expected default 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. For this transaction, the ratings on the Class A and Class M Notes address the payment of timely interest on a semiannual basis and the payment of principal by the Legal Final Maturity. The ratings on the Class B Notes address the ultimate payment of interest and the ultimate payment of principal by the Legal Final Maturity.
-- The capabilities of Renew Financial Group LLC (Renew or the Company) with regard to originations and underwriting.
-- DBRS Morningstar performed an operational review of Renew and considers the Company to be an acceptable originator of Property-Assessed Clean Energy (PACE) Assessments.
-- The legal structure and presence of legal opinions that address the true sale of the PACE Assets to the Issuer, the nonconsolidation of the Issuer with the Depositor, that the Issuer has a valid first-priority security interest in the PACE Asset Portfolio, and the consistency with DBRS Morningstar’s “Legal Criteria for U.S. Structured Finance.”
-- Review of legal considerations specific to PACE.
-- California Statewide Communities Development Authority and Western Riverside Council of Governments had validation judgments issued by the California Superior Court that confirm that the PACE Bonds and underlying PACE Assessments are valid and enforceable obligations that conform to all federal and state laws. In addition, the judgments also ruled that the PACE Assessments do not constitute a taking of private property without due process of law in violation of the fifth and 14th Amendments to the U.S. Constitution or the California Constitution.
-- The Florida Green Finance Authority also had a validation judgment issued by Circuit Court of the Second Judicial Circuit in and for Leon County, Florida, that confirms that the PACE Assessments are valid and enforceable obligations that conform to all federal and state laws. In addition, the judgment also ruled, similar to the California validations, that the PACE Assessments do not constitute a taking of private property without due process of law in violation of the fifth and 14th Amendments to the U.S. Constitution or the Florida Constitution.
-- Servicing is performed by local county tax collection offices.
-- Commingling risks associated with the servicing of PACE Assessments by local county tax collection offices in California and Florida are mitigated by the protections afforded special revenue collections under Chapter 9 of the U.S. Bankruptcy Code and certain structural features, including a County Reserve Account.

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/373262.

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

The principal methodology is Rating U.S. Property Assessed Clean Energy (PACE) Securitizations (July 31, 2019), which can be found on dbrs.com under Methodologies & Criteria.

For more information regarding rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/357883.

For more information regarding structured finance rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/358308.

For more information regarding the structured finance rating approach and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/359905.

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.

The full report providing additional analytical detail is available by clicking on the link under Related Documents below or by contacting us at info@dbrsmorningstar.com.

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

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