The lease payments do not make it to SCTY's balance sheet, they're securitized and sold as SolarBonds, a financial beast of their own, with no secondary market, no default protection and no rating from a ratings agency.

I've currently invested in Solar Bonds, and am comfortable with the risks they present. I don't need a secondary market and I'm not worried about vast amounts of people no longer paying their electric bill.

I treat it like a riskier CD, no more no less.

> I'm not worried about vast amounts of people no longer paying their electric bill

No one was worried about vast amounts of people no longer paying their subprime mortgages either. Not saying your investment strategy is wrong, but "predictions are difficult, especially about the future".

Significant difference between "triple A" sausage CDOs stuffed with subprime junk and Solar City obligations.

Among other differences, instruments tend to be a bit better priced when you're not lying about what's in them!

Yes they do. Solar Bonds are unsecured Solar City debt.

If the lease payments backing the bond stop, Solar City will attempt to rectify the situation, but it's not responsible for the remainder of the debt in any fashion. This specific aspect of operation is similar to other online servicers, like LendingClub, which would not compensate you in the event of a peer-to-peer loan default.

The prospectus https://solarbonds.solarcity.com/assets/bond_document/180/?f... lists the following risks (among others).

• your inability to initiate bankruptcy proceedings against SolarCity;

• the lack of certain “customary” investor protective covenants in the indenture;

• your inability to require us to repurchase the Solar Bonds upon a change of control of SolarCity;

• lack of cross-default provisions in the indenture with respect to our other debt; and

• the lack of an underwriter to conduct third party due diligence and other types of “gatekeeper” actions typically taken by an underwriter in an underwritten public offering.