By Diane Cardwell | The New York Times
Over the decades, Wall Street has used many assets to back up the bonds it sells, including car loans, life insurance policies and future royalties on David Bowie’s music. Now, in a milestone of sorts for the emerging solar industry, the finance wizards are embracing a new kind of security, this one backed by solar electricity payments.
Standard & Poor’s has given its preliminary blessing to the first offering of this kind, rating a set of notes intended to raise $54.4 million for the fast-growing installation company SolarCity. On Monday, it gave a rating of BBB+, a low investment-grade designation, to the notes. SolarCity plans to sell the bonds, which are secured by a bundle of residential and commercial power contracts, privately this month.
The bonds are expected to have a yield of around 4.8 percent, which, in a time of low interest rates, is a relatively high rate that compensates investors for buying such an untested security. The offering is also relatively small and will be sold only to select institutional investors.
