Kramer Levin Bolsters Track Record on Green Bond Issuance

Kramer Levin represented HERO Funding LLC, a subsidiary of Renovate America Inc., in its latest “green bond” offering of asset-backed securities. The securitization, HERO Funding 2017-1, included $232 million of class A1 and A2 notes rated AA (sf) by Kroll, AA (sf) by DBRS and AAA by Morningstar. It was the first PACE securitization to be rated by three different agencies and the first HERO bond securitization to obtain a AAA rating. It also included $36 million in BBB rated notes, for a total issuance of $268 million. The notes are initially secured by PACE assessments levied on nearly 8,000 residential properties in 38 California counties as part of Renovate America’s HERO Program. The HERO bond platform is the largest asset-backed securities platform to solely produce green bonds, with each of the company's ten securitizations having been designated as green by Sustainalytics, an investment research firm specialized in environmental, social and governance (ESG) research and analysis. HERO bonds also adhere to the Green Bond Principles, a set of commonly agreed standards in the capital markets on what constitutes a green bond, and published by the International Capital Markets Association. California state government officials have called the residential PACE program the most successful energy-savings initiative in the state’s history.