Income Investments

Investors looking for income have long relied on the stocks of electric utilities. Naturally cash generative utility companies have a history of generous dividend payout policies.  However, for those investors who have a concern about sustainability or climate change, even utilities with the highest dividend yields may not be appealing. We looked at a selection of nine utility companies with mixed achievements in terms of the percentage of renewable energy sources found in their retail sales of electricity.  The intensity of renewable energy in utility portfolios varies considerably across the industry.  Many utilities are grappling with legacy coal and oil infrastructure.  Others are not favored...

Tom Konrad CFA After the close on Thursday, November 7th, Hannon Armstrong Sustainable Infrastructure Capital (NYSE:HASI) declared third quarter earnings.  Results were in-line with my, and other analysts’ expectations: Earnings per share (EPS) of 14 cents, and a declared dividend of 14 cents as well. This more than doubled the second quarter’s 7 cent EPS and 6 cent dividend. Note: I have a large long position in HASI. HASI remains on track to reach managements’ dividend target of “over 7% of the $12.50 IPO price” (22 cents a quarter,) and provided some additional guidance for future dividends....

by the Climate Bonds Team Yieldco TerraForm Global (GLBL) issues a whopping $810m green bond (7 years, 9.75%, B2/B+) TerraForm Global Operating has issued an $810m green bond, with 7-year tenor, 9.75% coupon and ratings of B2 and B+ from Moodys and S&P respectively. TerraForm Global is a recent yieldco spin off (IPO last month) of SunEdison (SUNE) group (have a look here if the yieldco concept is new to you). Terraform Global owns and operates renewable energy assets - solar, wind and hydro - in emerging markets, in the following locations: Solar: China, India, South Africa,...

Readers may be interested in listening to this podcast. Where Stephen Lacey and Shayle Kann of GreenTechMedia speak with me about the current YieldCo landscape. Follow this link to The Interchange Podcast. -Tom Konrad, Editor

by Robert Muir Given the determined investor quest for yield as the Federal Reserve maintains the benchmark Federal Funds rate at zero, and the resurgence of attention being paid to alternative energy generation, mainly solar, and to a lesser extent wind and hydro, it’s no wonder Yield Co’s have gained so much investor interest lately. In the near to mid-term, the enthusiasm may be justified. Supported by Power Purchase Agreements, energy infrastructure financing and leasing contracts, and electricity transmission and distribution concessions, all with credit-worthy counter-parties, Yield Co’s are designed specifically to pay out a large portion of...

By Beate Sonerud SolarCity (NASD:SCTY) is issuing US$200m of asset-linked retail bonds, with maturities ranging from 1-7 years and interest rates from 2-4%. Wells Fargo is the banking partner. While the bonds are registered,SolarCity expects the bonds to be buy and hold, and not traded in the secondary markets. The bond is issued for small-scale investors, with investment starting at US$1000, giving this bond issuance a crowdfunding aspect. Choosing such a different structure allows SolarCity to diversify their investor base – the company stresses that small-scale investors are a complement, not substitute, for large-scale institutional investors. While...

by Tom Konrad Ph.D., CFA On a podcast recorded on September 14th, I said I thought that Yieldco stocks had bottomed at the end of September.  Two weeks later, that call still looks like a good one (see chart.) I'm starting to hear optimistic noises from other Yieldco observers, although the general tone remains quite bearish. Why do I think September 29th was the likely bottom? End of quarter.  Some institutional investors such as mutual funds reshuffle their portfolios at the end of the quarter so that they don't have...

by the Climate Bonds Team A record year with green bond issuance of USD 81bn, up 92% on 2015 figures The Trends A maturing of the green bonds market, diversification across issuers, products and use of proceeds are the main trends identified in our Green Bonds Highlights 2016 summary. The Big Numbers 92% – growth on 2015 making 2016 the most prolific year to date USD 11.8bn – November issuance, the largest month on record 24 – number of countries with green bond issuers 27% – proportion of Chinese issuers 241 – number of labelled green bonds issued (median size USD133.7m) >90 – number of new issuers >50 – number...

by Debra Fiakas CFA Last week NextEra Energy Partners, LP (NEP:  NYSE) reported financial results for the third quarter ending September 2015.  The numbers were released in along with quarter results from its parent, Florida-based utility NextEra Energy, Inc. (NEE:  NYSE).  The partnership is the operating arm of clean energy projects originated by the NextEra parent.  The ‘yieldco’ as these operating entities have been kindly dubbed by shareholders, delivered $1.0 million in reported net income, but operating cash flow was a whopping $36 million in the quarter. The consensus estimate had been for $0.24 in earnings per...

by the Climate Bonds Team Halfway in 2016: Issuance Up on 2015: New Underwriters from China: And Where Will Green Bonds Land by Dec 31st? The Headline Figures: At the end of Q2, issuance for 2016 stood at USD 34.6bn – bringing it close to the total issuance for 2015 with 6 months of the year to go.  In the first two weeks since the end of Q2 - total issuance surpassed the 2015 total. We expect even more in the second half of the year.  USD 18.6bn issued in Q2 alone making it the highest single quarter of green bond...

by the Climate Bonds Team Climate Bonds looks at the last six months numbers, the trends and our tips for the rest of 2017 Green Bonds Mid-Year Summary 2017  Headline figures for the Half Year (H1)  2017 issuance to H1: USD55.8bn Records broken: Quarter 2 (Q2) is the largest quarter of issuance on record at almost USD30bn 82 green bond deals issued in the quarter from 74 issuers Over 50% of issuers were first time issuers Green Bond transactions accounted for 3% of global bond market transactions in Q2 2017 Top 5 largest issuers of H1: Republic of France (USD7.6bn), EIB (USD2.8bn), ...

Bridget Boulle It’s been another ground breaking quarter for green bonds – the biggest yet with just under USD9bn issued ($8.997bn). It seems our initial estimate of $20bn for the year will be met much sooner than we thought so we’ve revised it to $40bn (there are no rules). There have been new issuers, new currencies, new underwriters, new areas of issuance and, for the first time, a green bonds index. All good things, here is a summary… The development banks led the way for the quarter but not by too much: development banks = USD4.9bn while corporates =...

by the Climate Bonds Team Hannon Armstrong’s (HASI) second green ABS, $118.6m, will save 0.39 tons of GHG annually per $1,000!  ($100.5m, 4.28%, 19 yr, A and $18.1m, 5.00%, 19 yr, BBB) Hannon Armstrong (NYSE:HASI) closed its second green ABS bond (Sustainable Yield Bond) following its inaugural issuance in December 2013. The ABS was a private placement split into two tranches with different credit ratings (from Kroll Bond Credit Rating Agency): $100.5m with a rating of A and 4.28% interest rate, and $18.1m with a rating of BBB and 5.00% interest rate. Both tranches have a 19-year tenor....