markets

OpCo: Revisiting Yield Vehicles In Context of Rising Rates

Revisiting Yield Vehicles In Context of Rising Rates & Slower Replacement Cycle

“With yieldco and yield-based vehicles selling off sharply post-election on expectations for rate increases, we believe it appropriate to consider the new landscape for these names in further detail. First, we expect increased yields for comparable assets to be a headwind as investors have more options with similar current income.

Second, the potential for softer regulation and non-enforcement may make accretive acquisitions increasingly difficult due to fewer projects being built, even for platforms with strong ROFO lists. Third, we believe slowing growth expectations would likely de-risk Street expectations and provide support for these names.

We continue to highlight HASI as a top pick given management’s history of managing through cycles and maintaining investment flexibility across multiple asset classes. We continue to be constructive on CAFD and NEP given their access to projects to support growth and PEGI given relatively attractive valuation.”

greg blotnick - opco
greg blotnick – opco

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s