In a ‘Watershed’ Deal, Securitization Comes to Commercial Efficiency

Securitization, the holy grail of energy efficiency finance, has finally arrived in the commercial sector.

Connecticut’s green bank, the Clean Energy and Finance Authority (CEFIA), today announced a deal to bundle and sell a sizable chunk of its C-PACE loan portfolio to the specialty finance company Clean Fund. The bonds, issued by the Public Finance Authority, are backed by $30 million of commercial PACE loans funding energy efficiency in commercial buildings in the state of Connecticut.

This transaction represents the first known securitization of commercial energy-efficiency loans, and it may be the event that finally unlocks institutional capital for efficiency finance. The deal comes a couple of months after the first in California.

Clean Fund has agreed to purchase $24 million of a $30 million bond issuance, with CEFIA holding on to the remaining $6 million of bonds as a first loss position. The commercial assets included in the securitization represent a diversified portfolio of property owners funded through a $40 million CEFIA warehouse program, including a major commercial office building in Middletown, a YMCA in Danbury, and a strip mall in Norwalk. The portfolio also features 750 kW of solar PV systems.