S&P gives Sunnova, notes B-

S&P said it gave B- ratings to Sunnova Energy International Inc. and its planned $350 million of senior unsecured notes due 2026. The notes’ recovery rating is 4, indicating an expectation for average (30%-50%; rounded estimate: 35%) recovery in default.

“Residential solar installations have had high growth, but the long-term sustainability of Sunnova's business is uncertain. Sunnova operates one of the largest fleets of residential solar energy systems in the U.S., comprising more than 940 megawatts of generation capacity and serving more than 162,000 customers. Its revenue grew by just over 22% in 2020 and 26% in 2019, and we expect growth above 25% over the next two years. Nevertheless, the U.S. residential solar energy market is at a relatively early stage of development, and the company faces numerous adverse market forces outside of its control,” S&P said in a press release.

The outlook is stable, indicating an expectation that good residential solar demand, financing conditions, and operating performance will help Sunnova's customer acquisitions and earnings growth over the next 12 months. “We expect adjusted EBITDA of more than $40 million in 2021 and $80 million in 2022, with a sustained liquidity cushion of at least $250 million,” the agency said.

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