

SolarCity Offers Bonds Online to Ordinary Investors - JumpCrisscross
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

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zaroth
I wonder how much it cost to be able to make the offering to the general
public vs. under an exemption to institutional investors only. I'm not
familiar with the rules around bond offerings vs. stock offerings. Apparently
they have registered with the SEC and filed a prospectus:
[https://solarbonds.solarcity.com/assets/bond_document/4/?fil...](https://solarbonds.solarcity.com/assets/bond_document/4/?filename=prospectus)

Also interesting they are selling direct through their own platform at
[https://solarbonds.solarcity.com](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...

    
    
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rory096
>... 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.

~~~
zaroth
Oh that's really interesting, Common Assets' chief architect John Witchel
previously was CTO of Prosper.

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srcmap
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.

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hijinks
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.

~~~
nate_meurer
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.

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ChuckMcM
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...](http://www.nytimes.com/2013/11/15/business/energy-
environment/bonds-backed-by-solar-power-payments-get-nod.html)

~~~
hkmurakami
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.

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kudithipudi
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.

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druiced
Red flags!

