NEW YORK--(BUSINESS WIRE)--Please replace the release with the following corrected version due to multiple revisions to the second paragraph.
The corrected release reads:
KROLL BOND RATING AGENCY ASSIGNS PRELIMINARY RATINGS TO HERO FUNDING CLASS A NOTES, SERIES 2014-1
Kroll Bond Rating Agency (KBRA) assigns a preliminary rating of AA(sf) to HERO Funding Class A Notes, Series 2014-1 (HERO 2014-1). The notes are newly issued asset-backed securities backed by a portfolio of Property Assessed Clean Energy (PACE) bonds.
The notes are secured by 90 limited obligation improvement bonds, issued by Western Riverside Council of Governments (WRCOG). The PACE bond portfolio is secured by 5,890 PACE assessments levied against 5,627 residential properties located in the County of Riverside, CA. The average PACE assessment is $18,273 with an average annual payment of $2,175. The transaction benefits from credit enhancement in the form of excess spread, overcollateralization, and a liquidity reserve.
KBRA analyzed HERO 2014-1 using the General Rating Methodology for Asset-Backed Securities published on July 30, 2012. PACE assessments fall within Category 1: Financial Assets. The key determinants considered in the rating outcome are: a structural and legal analysis of the transaction; the treatment of PACE assessments as senior tax liens; and the creditworthiness of the County of Riverside, California. As part of the rating process, KBRA completed an operational review of WRCOG, County of Riverside, California, and Renovate America, Inc. with satisfactory results.
KBRA believes the transaction benefits from sufficient credit enhancement and a structure that accelerates principal payments to the rated notes upon weakening asset performance. In addition, KBRA views the eligibility requirements, especially the low LTV of the PACE assessment, as a positive credit consideration for this transaction.
| Class | Rating | Initial Principal Balance | ||||
| Class A Notes | AA (sf) | $104,397,000 | ||||
About Kroll Bond Rating Agency
KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).
