Credit Suisse and Guggenheim are hoping to break into the market as bookrunners, an area currently dominated by Morgan Stanley and Deutsche Bank.
“I think this could be a near future possibility,” said a person with knowledge of the discussions.
The market is still nascent, but market participants are optimistic that it will grow quickly as demand for PACE loans surges. About half a dozen deals have been issued since the first hit the market in 2014.
Volumes of PACE loan origination have been ramping up, with residential PACE loan origination exceeding $1bn since 2010, according to DBRS. Commercial PACE loan issuance, which currently stands at $176m, is also starting to gain momentum.
Guggenheim recently beefed up its power, energy and renewables advisory when it hired Morgan Stanley alumnus Daniel More as senior adviser in its investment banking and capital markets division on February 19.
More's appointment will support the expansion of the firm’s investment banking services in the power, energy and renewables sectors, a Guggenheim spokesperson told sister publication Power Finance & Risk.
Before working at Morgan Stanley, More spent 10 years at Credit Suisse First Boston, where he started and grew the firm’s New York utility merger and acquisition franchise, serving as executive director.
Guggenheim also hired three senior bankers six month before More's appointment to focus on advisory mandates in energy and power.
Deal watchers said that while Credit Suisse has shown interest in the commercial property side of the market, the bank has been a little more resistant towards the residential side.
As PACE loans have first-lien status, this has created issues for mortgage originators looking to sell home loans to the government sponsored agencies. According to one market observer speaking with GlobalCapital at ABS Vegas, PACE issuers may begin to address this by issuing subordinate PACE loans this year.
With PACE origination levels expected to surge past $1.5bn in 2016, an increasing number of firms have been looking to work with issuers to market deals. Renovate America previously told GlobalCapital that it may bring on an additional underwriter to its programme later this year, while Ygrene Energy Fund previously said it is looking to do a broadly syndicated placement sometime in Q3.
Representatives at Credit Suisse and Guggenheim did not respond to requests for comment.