First Solar Bonds Financing $4.6 Billion U.S. Panel Boom

Underwriters from Bank of America Corp. (BAC) to Credit Suisse AG and Citigroup Inc. (C) for the first time are close to converting sunlight into cash to pay bond investors.

Similar to asset-backed securities that finance everything from car purchases to college tuition, solar bonds will help fund rooftop power projects that Bloomberg New Energy Finance estimates will need to raise about $4.6 billion next year. Investors will be paid from monthly payments from people with photovoltaic panels atop their homes and businesses.

Securitization will “open up substantial amounts of liquidity and credit capacity to an industry that doesn’t have it today,” said Bill Heskett, Bank of America Merrill Lynch’s managing director of asset-backed securities. He said the first deal may come in 2013 and declined to name potential issuers.

U.S. solar installations, including rooftop and utility- scale projects, may jump at least 75 percent to exceed 3,200 megawatts this year, enough to supply about 700,000 California homes, according to the Solar Energy Industries Association trade group. Developers are seeking new sources of funding after a U.S. tax incentive expired last year. They may have to pay higher interest rates than more established asset-backed bonds to attract investors.

Companies such as SunRun Inc. and SolarCity Corp. are booming in the U.S. by financing rooftop solar arrays without charging for installation. Customers lease the systems or buy the electricity, typically for about 15 percent less than standard power rates under 20-year contracts.

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