SolarCity Corp., the first U.S. company to offer bonds backed by rooftop solar panels, raised $201.5 million in its third debt offering in eight months.
Solar City priced $160 million in senior debt and $41.5 in junior notes, the San Mateo, California-based company said today in a statement. The transaction is expected to close July 31.
The senior notes were sold at an interest rate of 4.03 percent and were rated BBB+ by Standard & Poor’s, the third-lowest investment grade. The junior notes were sold at an interest rate of 5.45 percent and were rated BB, which is not investment grade. Both tranches mature in July 2022.
“SolarCity is executing well, particularly its pioneering role in reducing cost of capital via securitizations,” Pavel Molchanov, an analyst at Raymond James & Associates Inc. in Houston, wrote today in a note to investors. He raised his 12-month price target to $80 from $75.
The company sold $70.2 million of bonds in April, with a rate of 4.59 percent. Chief Financial Officer Bob Kelly said in November, after the company’s first debt sale of $54.5 million at 4.8 percent, that it would be seeking additional, and larger, offerings.
SolarCity installs rooftop solar systems for customers who typically pay little to nothing up front and sign long-term agreements to buy the electricity. Those contracts are well-suited for securitization, Molchanov said.