SolarCity Offers Bonds Online to Ordinary Investors(dealbook.nytimes.com)
dealbook.nytimes.com
SolarCity Offers Bonds Online to Ordinary Investors
http://dealbook.nytimes.com/2014/10/15/solarcity-offers-bonds-online-to-ordinary-investors/?_php=true&_type=blogs&emc=edit_dlbkpm_20141015&nl=business&nlid=65508833&_r=0
5 comments
>... said Tim Newell, SolarCity’s vice president for financial products.
>“By expanding the pool of people who can participate in financing solar with us, we’re diversifying our sources of capital,” said Mr. Newell, who was president and chief executive of Common Assets, an investment platform developer that SolarCity bought this year. “That also makes us more resilient in any economic environment and over time should help us be able to have the lowest cost of capital.”
Looks like it was a startup they bought/acquihired.
>“By expanding the pool of people who can participate in financing solar with us, we’re diversifying our sources of capital,” said Mr. Newell, who was president and chief executive of Common Assets, an investment platform developer that SolarCity bought this year. “That also makes us more resilient in any economic environment and over time should help us be able to have the lowest cost of capital.”
Looks like it was a startup they bought/acquihired.
Oh that's really interesting, Common Assets' chief architect John Witchel previously was CTO of Prosper.
Since SolarCity is already a public company, they can use a short-form registration statement called an S-3. Information that is available in the company's other filings and can be incorporated by reference (the SEC's version of D.R.Y.).
The costs are still higher than doing an unregistered offering, but are much lower than doing the company's first registered offering.
Even though the article calls this "crowdfunding," this offering is not being conducted using the new JOBS Act crowdfunding provisions.
The costs are still higher than doing an unregistered offering, but are much lower than doing the company's first registered offering.
Even though the article calls this "crowdfunding," this offering is not being conducted using the new JOBS Act crowdfunding provisions.
It appears the 30% tax credit Solar City relies on is set to expire at the end of 2016.
I don't trust SolarCity!!! I filled out their application once in Home Depot. One item I filled was my pg&e monthly cost, after that, for the next 6 months, I got constant targeted email ads and almost daily telemarketer call started with my pg&e bill amount - as if that will make me trust them.
The pg&e # only let me know right away who sold my private info to the telemarketers.
For such company who sold me email, phone, pg&e bill info to 3rd parties, I have NO respect for them and will absolutely won't ever do any business with them ever again.
The pg&e # only let me know right away who sold my private info to the telemarketers.
For such company who sold me email, phone, pg&e bill info to 3rd parties, I have NO respect for them and will absolutely won't ever do any business with them ever again.
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same happened to me.. they came out also to do a site visit and quote and I think my electric bill was something like 160 a month and they quoted me at like $145 a month.
I'm on the boat that in 5-10 years solar will be so cheap everyone will just be buying panels and not leasing and even battery storage could be cheap to buy. The people with 25-30 year leases will be kicking themselves.
I'm on the boat that in 5-10 years solar will be so cheap everyone will just be buying panels and not leasing and even battery storage could be cheap to buy. The people with 25-30 year leases will be kicking themselves.
I'm excited to see your 5-10 year prediction come true, and I think it will. However leasing will always make sense for some people. I have two 4 kW solar arrays on two separate houses, and I paid nothing for them. Instead of paying by electric bill to the utility, I now pay Real Good Solar (the company who leased them to me) a flat rate comparable to my average monthly rate calculated before I had the panels installed. The main incentive for me is that Real Goods Solar's bill increases ~2% per year, compared to the utility's average monthly increase of ~10%, so in 5-10 years my electric bill will be substantially cheaper than it would have been without the solar. The lease has a 20 year term, after which I own the system.
I'm surprised that 'ordinary investors' wouldn't get the same 4.8% they offered institutional investors[1]. S&P only gave them a BBB+ rating. Sure that is "investment grade" but not great.
[1] http://www.nytimes.com/2013/11/15/business/energy-environmen...
[1] http://www.nytimes.com/2013/11/15/business/energy-environmen...
You shouldn't directly compare the yield on an offering that was made in Nov 2013 for "up to ~13 year" bonds (according to your linked article) to the yield on an offering in Oct 2014 for what is reported as 5 to 7 year maturities.
Different maturities, different yield on the 10 year treasury benchmark, different investor sentiment for risk (10y bond yields are at the lowest point YTD right now as we see a "flight to safety" over the past weeks), etc.
Obviously neither of us has enough information to do a proper analysis in pricing these bonds, but even so, I would be wary of employing that kind of direct apples to apples comparison in this context.
Different maturities, different yield on the 10 year treasury benchmark, different investor sentiment for risk (10y bond yields are at the lowest point YTD right now as we see a "flight to safety" over the past weeks), etc.
Obviously neither of us has enough information to do a proper analysis in pricing these bonds, but even so, I would be wary of employing that kind of direct apples to apples comparison in this context.
This is very smart of SolarCity. While the investors are getting a relatively (BBB) well rated investment, it is providing SolarCity with a low cost of capital.
Red flags!
Also interesting they are selling direct through their own platform at https://solarbonds.solarcity.com. You can create an account, you have to give them your SSN, and then you transfer funds from a bank account and can start buying. I assume interest gets paid through the same platform. I wonder if it's actually a white label platform branded for them, or if it's a custom job.
So assuming they paid several million all told for the SEC registration, the platform, etc.... interesting to think how much cost you could wring out of the system with the right software.
Doesn't seem like it's all that popular just yet...