As per BBB+ rating agency rating, Solarcity receives over 99% of all payments due on time on its revenue generating assets, average FICO score is 746. incredible quality, can't find much if anything better on the market today.
You haven't understood a word I've written, have you? That *does not matter*. It's an irrelevance. We all know that perception of credit quality can change overnight, and it's *perception* of credit quality which matters for refinancing, not actual credit quality.
Question number one is, are they reselling those payment streams at a profit or not? *I don't know*, and you don't know either. If you did you would have presented evidence that they were doing so. The accounting is such a mess that it's very hard to *tell*.
Respected auditors, independent investment analysts, etc. all *agree with me* on this.
We *know* they took a loss on one deal, because there's documentation of it in the annual report -- they unwound it at a loss to get out of it! That could be a rare exception, or it could be typical for the deals to be that unprofitable -- but the presentation of the financials obscures things enough that *I can't tell*.
Question number two is, will they continue to resell them at a profit? Since we don't even know how often they're doing so now, this is very hard to tell!
Question number three is, how much have they retained on their books (self-financed) which will require refinancing before it's fully paid off, and the answer appears to be over a billion dollars.
I want them out of this business. If the solar installs are *prefinanced* they have none of this risk.
You agree with me that they finance solar installs initially using revolving loans and solar bonds. Then, MAYBE they manage to sell them at a profit as ABS. Or maybe they don't. If they don't, *even for one month* -- perhaps due to mood swings in the financial markets -- they end up on the hook for a huge refinancing problem. This is a *banking risk*.
Due dilligence is key everyone, make your own judgments and conduct your own analysis...
Indeed. I am hoping that when the Tesla board does their due diligence, they will release some of the information which is necessary to evaluate these banking risks. SolarCity hasn't released it.