The first group of lenders that have signed up for a new UK government programme to subsidise financing for home energy upgrades include several companies that already have private securitisation warehouses, and others that aspire to, boosting the prospects for UK green ABS issuance in the coming years.
The Warm Homes Loan Scheme, which was confirmed in the UK government’s autumn budget on 28 October, is intended to support the origination of £1.75bn of loans for retrofits over the next five years.
While £1.75bn of loans over five years may not be a game-changing amount for the ABS market, observers note that the programme could later be scaled up if it delivers tangible results.
“Politicians will want to see the impact and take-up,” said Julian Craughan, a partner at Hogan Lovells Cadwalader, who has worked on several securitisations of residential renewable energy assets.
“There’s no point signing on a big commitment to do something if it doesn't move your needle from a policy standpoint,” he said. “But if it is successful, it could well be upsized, or there could be a second tranche with any adjustments that need to be made.”
So far, the early signs are promising.
“Our...
