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NRG Energy

NRG is the largest U.S. independent power producer with 51 GW of generation. NRG is the only U.S. IPP with a publicly traded Yieldco in NRG Yield. The company also has a retail business with 3 million customers that somewhat offsets the negative impact of weak gas and power prices. 33% of the company's fleet is in the favorable PJM market where capacity payments pay generators simply for being available to run and this revenue stream somewhat offsets weak commodity prices. 23% is in Texas and 18% in California, two unfavorable power markets owing to cheap gas prices and renewables growth. (08 Dec 2017)

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Oil & Gas: HY E&P Cash Flows at $50/bbl Oil

Sector Analysis: 28 Nov 2018, 4:10 AM ET - We now see HY E&P 2019 cash flows coming in 24% lower than previously expected at our new $50/WTI price deck ($65/WTI old).  We expect to see a mix of capex cuts, divestitures and incremental borrowings next year.

Oil & Gas: Slashing Oil Outlook, Downgrading E&Ps

Sector Analysis: 26 Nov 2018, 4:48 AM ET - We believe the recent 33% drop in oil prices is likely to be just the first leg of a deeper decline.  We are reducing our 2019 oil price view and recalibrating our IG and HY E&P investment recommendations to a more defensive position.

US Strategy: What to Watch for on 3Q Earning Calls

Strategy Analysis: 11 Oct 2018, 4:37 AM ET - We surveyed our analyst teams for key sector level issues they will be paying close attention to with upcoming third quarter earnings calls beyond the typical sales, margins and earnings guidance. 

HY Power: Calpine EBITDA Soaring w/ TX Heat

Company Analysis: 30 Jul 2018, 6:01 AM ET - We calculate the heat wave that hit TX in July combined with strong August forward power prices could add $450 million of EBITDA to Calpine’s $1.8-1.9 billion EBITDA run-rate of the last several years.
Focused

HY Power CLO Monitor: Secured Debt Update

Sector Analysis: 24 Jul 2018, 5:35 AM ET - We expect stable to improving secured leverage across the HY Power sector driven by a strong outlook for free cash flows as capex is minimal across the board. 
Focused

HY Power: TX Spark Spreads Continue to Climb

Worth Watching: 02 Jul 2018, 10:55 AM ET - HY Power - Spark spreads for the month of June finished mixed relative to last year's levels and closed higher in Texas / ERCOT (+12%), PJM West (+21%) and East (+4%) while falling significantly in Northern/Southern CA and New England. So far t ..

AES: Exits Eletropaulo Stake, Positive for CEMIG?

Worth Watching: 14 Jun 2018, 10:28 AM ET - AES (Ba2/BB+) announced it has officially exited its 17% stake in Eletropaulo (ELPL3: a Brazilian utility, no USD bonds) for $310 million and will use the proceeds to reduce parent level debt. We view the sale as another positive signal for AES ho ..

Utilities & Power: Trade Pub & Twitter Takeaways

Sector Analysis: 07 Jun 2018, 4:59 AM ET - We provide investors highlights from worthwhile stories we've read in trade publications and twitter over the last two weeks. 

HY Power: Texas Spark Spreads Surge in May

Worth Watching: 31 May 2018, 9:52 PM ET - HY Power: Spark spreads for the month of May finished well above last year's levels in ERCOT and PJM West and well below last year's levels in Northern CA. May was overall positive month for power producers with only Northern California showing ..

Utilities: What do the EQ Hedge Funds Own?

Sector Analysis: 25 May 2018, 4:43 AM ET - We are tracking utility hedge fund ownership and while it doesn’t have any real basis in our credit views, it is still something easy to track and has the potential to be forward looking in terms of capital structure changes.
Focused

Power & Utilities: Gangbuster PJM Auction +83% YoY

Sector Weightings: 23 May 2018, 9:11 PM ET - PJM capacity auction prices rose 83% YoY, w/multiple new regions breaking out even higher. TLN bonds are likely most exposed to the upside. Positive for PEG, EXC, VST, CPN, and NRG. 
Focused

Exelon Generation: Soaring S.Spreads for TX Plants

Worth Watching: 06 May 2018, 9:33 PM ET - Exelon Generation (Baa2/BBB) brought online two new power plants in TX last year that have seen their profit potential increase significantly and while we picked on these plants in the past and picked on management for essentially burying discl ..

TerraForm: Buy, Brookfield Maintaining Control

Earnings Note: 03 May 2018, 10:09 PM ET - Buy TERP Bonds....We believe the Canadian clients get it and most of the American asset managers balk at TERPs leverage and aren't as familiar with Brookfield's sterling reputation on credit quality. 
Focused

NRG Energy: 3x Net Lev. on Track; Large M2M Gain

Company Analysis: 03 May 2018, 9:40 AM ET - NRG's 3x net leverage target is on track as investors brace for a record hot summer in TX that is not without significant operating risk. 

Transcanada: TCP Drops 29% on Distribution Cut

Worth Watching: 02 May 2018, 9:20 PM ET - Transcanada  (TRP: A3/BBB+) U.S. MLP, TC Pipelines, fell 29% on Wednesday after announcing a 35% distribution cut and is now down 53% in 2018.  The initial FERC announcement drove TCP equity down ~26%, which made equity funding unattractive, and ..

Crestwood 1Q18: Totally Committed to Being an MLP

Earnings Note: 01 May 2018, 11:14 AM ET - CEQP reported 1Q18 adjusted EBITDA of $102mn, up 12% YoY and below consensus estimates of $103mn, driven primarily by strong gathering and processing volume increases.  
Focused

Battery Conf. Notes: Peak Power Risk, IG Utes Fine

Sector Analysis: 26 Apr 2018, 4:44 AM ET - We attended a 3-day battery storage conference in Boston and provide our takeaways for IG utility investors and HY power investors. 
Focused

NRG Analyst Day: Mgt Serious about 3x Net Leverage

Company Analysis: 28 Mar 2018, 4:14 AM ET - We love the NRG story for bondholders, but with the bonds trading at their call price there is little upside in all but the 2028s. 

SunPower: Pros Cons & Silver Lining, Bonds 77-80c

Company Spotlight: 19 Mar 2018, 5:35 AM ET - SunPower convertible bonds are down ~6-10 points since August '17 and its equity is down ~38% over the same period. Mgmt is trying to get an exemption from Trump's 30% tariff on solar panels and Total S.A credit support seems constructive

Vistra 4Q: Management Mentions IG Ratings!

Earnings Note: 26 Feb 2018, 1:17 PM ET - During the Q&A, VST management mentioned the potential for IG ratings after its 2.5x net leverage target is reached, likely in 2019.

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