Morningstar DBRS Confirms Credit Ratings on 11 HERO Funding Transactions

DBRS, Inc. (Morningstar DBRS) confirmed the credit ratings on all classes of securities included in 11 HERO Funding Transactions.

CREDIT RATING RATIONALE/DESCRIPTION
Credit rating rationale includes the key analytical considerations.
-- Transaction capital structure, current ratings and available credit enhancement.

-- Adequate credit enhancement in the form of overcollateralization, liquidity reserve accounts (class A notes), and excess spread.

-- The ratings address the payment of timely interest on an semiannual basis and the payment of principal by their scheduled maturities. PACE Assessments have equal-lien priority with such property taxes or other special taxes/assessments secured by the same property.

-- Legal considerations specific to PACE including validity in all relevant jurisdictions. The obligation to pay the PACE assessments is transferable. When a property is sold, the new owner is responsible for any outstanding PACE assessments and payment penalties as part of the purchase of the property. Additionally, protections are afforded to special revenue collections under Chapter 9 of the U.S. Bankruptcy Code and certain structural features, including a county reserve account, mitigate commingling risks associated with the servicing of PACE assessments by local county tax collection offices.

-- The transaction assumptions consider Morningstar DBRS' baseline macroeconomic scenarios for rated sovereign economies, available in its commentary, "Baseline Macroeconomic Scenarios For Rated Sovereigns: March 2025 Update," published on March 26, 2025, These baseline macroeconomic scenarios replace Morningstar DBRS' moderate and adverse coronavirus pandemic scenarios, which were first published in April 2020.

Morningstar DBRS' credit ratings on the applicable classes address the credit risk associated with the identified financial obligations in accordance with the relevant transaction documents. Where applicable, a description of these financial obligations can be found in the transactions' respective press releases at issuance.

Morningstar DBRS' long-term credit ratings provide opinions on risk of default. Morningstar DBRS considers risk of default to be the risk that an issuer will fail to satisfy the financial obligations in accordance with the terms under which a long-term obligation has been issued.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factor(s) that had a significant or relevant effect on the credit analysis.

A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (August 13, 2024) https://dbrs.morningstar.com/research/437781.

Morningstar DBRS notes that this press release was amended on May 21, 2025, to remove trends that were incorrectly added.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal methodology applicable to the credit ratings is Morningstar DBRS Master U.S. ABS Surveillance (April 10, 2025) https://dbrs.morningstar.com/research/451793.

Other methodologies referenced in this transaction are listed at the end of this press release.

The credit rating was initiated at the request of the rated entity.

The rated entity or its related entities did participate in the credit rating process for this credit rating action.

Morningstar DBRS had access to the accounts, management and other relevant internal documents of the rated entity or its related entities in connection with this credit rating action.

This is a solicited credit rating.

For more information on Morningstar DBRS' policy regarding the solicitation status of credit ratings, please refer to the Credit Ratings Global Policy, which can be found in the Morningstar DBRS Understanding Ratings section of the website: https://dbrs.morningstar.com/understanding-ratings

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the credit rating process.

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The credit rating methodologies used in the analysis of this transaction can be found at: https://dbrs.morningstar.com/about/methodologies.

-- Operational Risk Assessment for U.S. ABS Originators and Servicers (March 26, 2025)
https://dbrs.morningstar.com/research/450709
-- Legal Criteria for U.S. Structured Finance (December 03, 2024)
https://dbrs.morningstar.com/research/444064
-- Rating U.S. Structured Finance Transactions (March 10, 2025)
https://dbrs.morningstar.com/research/449616
-- Rating U.S. Property Assessed Clean Energy (PACE) Securitizations (August 06, 2024)
https://dbrs.morningstar.com/research/437561

For more information on this credit or on this industry, visit dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.