BUZZ-Yieldcos low on gas as summer slump accelerates

Fri Aug 7, 2015 12:27pm EDT
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** The halving of SunEdison's market value in just over two weeks highlights the perfect storm surrounding Yieldcos

** The combination of high yield and dividend growth hit the sweet spot for investors in a low-yield world making yieldcos an increasingly crowded trade

** Now, falling commodity prices, an oversupply of equity issuance and fears over higher cost of financing in the future taking a bite out of sector, Macquarie says

** MLP and MLP-like structures such as US yieldcos being sold indiscriminately as analysts see no fundamental link between oil prices and demand for renewable power installations

** Yieldcos with high DPS growth targets (10%+) need to raise additional equity, Macquarie says, just as investors suffer deal fatigue and have little appetite for sector

** Given that DPS growth depends on cost of financing, note sponsor SunEdison willing to lower pricing of renewable projects being dropped into Terraform Power Inc yieldco

** Terraform, Nextera Energy Partners LP and NRG Yield Inc remain broker's top picks following recent selloff

** Sector running into rough weather in Europe too as Spanish energy group Abengoa grapples with cash flow issues at certain projects (RM: