Connecticut green bank in $30m PACE securitisation

Channels: Corporate, Debt, Investment, Markets

Companies: Clean Energy Finance and Investment Authority, Clean Fund, Public Finance Authority

People: Bert Hunter

Connecticut's 'green bank' has announced the securitisation and sale of a $30 million portfolio of transactions financed under its commercial clean energy initiative.

The portfolio was originally financed under the state's Commercial Property Assessed Clean Energy (C-Pace) initiative, which provides up-front financing for energy efficiency and renewable energy improvements on buildings. The investments are repaid through a charge on the property's tax bill.  

The Clean Energy Finance and Investment Authority (CEFIA), which is often referred to as the state's green bank, said the portfolio has now been sold to Clean Fund, a company that specialises in providing finance for Pace initiatives.

Clean Fund has effectively paid about $23 million for the portfolio, Environmental Finance understands.

This is because Clean Fund paid some 95.9% of the 'par value' of the bonds after a winning a bidding auction. In addition, CEFIA 'took back' some 20% of the bonds – those that were subordinated to the senior bonds – in order to enhance the credit of the transaction. It likened the move to 'taking back paper' in a property sale.

The bonds were issued by the Public Finance Authority, a government entity established to issue tax-exempt bonds for public and private entities across the US.

The C-Pace programme has closed on 23 projects and approved an additional 10, representing an investment of $30 million across 25 municipalities in the state. These projects include energy efficiency, clean distributed generation and a combination of the two.

The portfolio represents lifetime energy savings equivalent to $40 million, CEFIA estimates. With an additional 75 projects in the pipeline, financing of up to $75 million is anticipated by the end of 2014.     

"The sale of this initial portfolio of Pace liens to Clean Fund is the latest step in our effort to attract and deploy private capital here in Connecticut supporting energy efficiency and renewable energy opportunities," said Bert Hunter, chief investment officer at CEFIA. "Some of the greatest value of the sale has been our enhanced understanding of how private capital providers currently value these low-risk, secure transactions."

He added: "The bottom line is that Pace is working for building owners who are seeing energy improvements deliver substantial savings and Pace is working for investors who see the security of the financial structure of Pace and are willing to invest in Connecticut." 

Peter Cripps