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Atlantica Yield plc (ABY)

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ABY has one of the best yields for yieldco, and it costs a lot less per share than TERP, they are paying $1.60 per share in 2015 and plan to pay $2 to $2.10 in 2016, this is 8.4% yield. They also reported profit in Q2. TransAlta Renewables costs about $12.5 CAD per share and pays $0.84 per year in dividends. Same yield. No solar only adding this month. Profitable as well.

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ABY has one of the best yields for yieldco, and it costs a lot less per share than TERP, they are paying $1.60 per share in 2015 and plan to pay $2 to $2.10 in 2016, this is 8.4% yield. They also reported profit in Q2. TransAlta Renewables costs about $12.5 CAD per share and pays $0.84 per year in dividends. Same yield. No solar only adding this month. Profitable as well.

"No sloar only adding this month"? Pls clarify? Thx Sent from my iPad using Tapatalk

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TransAlta bought its first solar plant this month, mostly hydro and wind assets they had to this point.

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These are more attractive yields than CAFD. I'm not sure sponsor relation is a positive for the yieldco. High yield and no or low IDR cap on future divend growth is what I look for. Do you now the IDR terms of ABY and TransAlta?

 

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I did no have time to make a serious comparison, but it is interesting to do so. I know that TransAlta is very stable in price and pays regularly as my wife has it. I do not think IDRs are in RWN. TO

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Many of my yieldcos have reported and the dividend growth announcements are just crazy. I can understand why low yields were accepted before. 66% YoY DPS growth for ABY in 2015 and 33% guided for 2016.

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Yes, this will be interesting to follow. Are the yieldcos the good kids of the bad parents? Will death of parent release their full potential?

 

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Explo, just please note that there is large amount of fx risk that is hedged through parent...now that might pose quite some challenge for ABY given large number of projects in emerging markets.

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5 minutes ago, dk1 said:

Explo, just please note that there is large amount of fx risk that is hedged through parent...now that might pose quite some challenge for ABY given large number of projects in emerging markets.

Thanks that's good info. How does that hedge work? Will they just no longer be hedged or will they risk losing money on their hedge positions when parent becomes insolvent?

 

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I dont know the details...but I always wondered why ABY did not take a writedown on LATAM and Southafrican projects inspite of such a decline in currencies...IMO some of this was because they had hedged large share of these project revenue through Abengoa..that is what they always mentioned in their presentations...

Overall I do think ABY is trading at good levels, it does not have IDR issue and less linked to parent (I think now not even majority owned)..so it could survive the bankruptcy of parent without much damage, but personally I will wait for a while before taking a position.

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More: http://www.bloomberg.com/news/articles/2015-11-27/abengoa-yield-said-to-work-with-jpmorgan-on-stake-sale-plans?cmpid=yhoo.headline

Abengoa Yield wants to find a long-term investor to guarantee its sustainability as an independent business after its parent company filed for preliminary protection from creditors. It has mandated a top-tier investment bank to lead the search for a new sponsor, according to a statement Friday. It’s also working on new branding and hiring a new chief financial officer from outside the company.

A representative for Abengoa Yield and Abengoa declined to comment. A representative for JPMorgan couldn’t immediately comment.

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It would be anything hardly different in cases of TERP and GLBL. Those appointments could be lifesavers send to execs of SUNE just in case the main ship goes down.

To contrary to popular opinion I suspect that yieldcos as fix asset collectors will be nourished to strength at the sacrifice of SUNE. It makes complete sense to rescue viable business  format and inject with enough resources from a dying failure, when all fails.

Anyone who ran multiple businesses will not claw to failing one at the price of the good one. MEMCs transition was a illustration of it. Set apart polysilicon business being a complete disaster SUNE could be saved and was result of action to save the business years back.

We are going to witness actions going into the future and see how really three organizations are going to be played. I have no doubt empty headed market sees yieldocs as SUNE spawn infected with the same issues and this is a potent opportunity with realization of risks of fluctuation in price and nerve-wrecking journalism sentencing every one of those companies to various faiths almost daily. 

My view on the last paragraph will be taken on TERP board.

 

 

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I have the same view odyd. I'll be more wolf than sheep here and pick up all yieldcos offered at bargain prices to asset values. I have a patient attitude towards it where I'm ok to wait with share appreciation and just collect dividend at great yield while waiting years if necessary until valuation normalize. I'll be feeding on the fear mongering reporting.

 

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Explo,

This article is certainly putting a light on potential corporate behavior around yield and sponsor relationship. I think it is wrong, but reading it I would be cautious to get into the name now, I hope you can have a chance to read it.

http://finance.yahoo.com/news/abengoa-yields-dividend-spotlight-115732125.html

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Strange claim about timing of dividend payout. It looks like I got mine on time. I think the fear of dividend sustainability will go away as the companies keep paying them out. Sure the companies need to add assets some time before 2035 when current asset base starting to lose steam. 20 years is plenty of time for the market to get back its yieldco appetite so companies can sell shares and acquire asset to secure the future dividends.

 

 

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Another credit life-line for Abengoa: http://finance.yahoo.com/news/creditor-banks-inject-113-mln-113627189.html

Again backed by ABY shares. ABY has had a strong week with 15% appreciation. I wonder how it responds today. Never boring owning the kids of SUNE, ABGB, NRG and TAC (TERP, GLBL, ABY, NYLD and RNW.TO). BAM and NEE sure seems like more solid parents and thus are the stocks of their kids (BEP and NEP).

 

 

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A US unit of Spanish Abengoa (ABY's parent) files for bancruptcy. The US unit is said to have $10b debt (!) and its creditors fear the parent has been blowing up the subsidiary's debt and tapping it of cash to prevent its own bancruptcy. Good thing ABY has good ring fence and is separating itself from failing parent. TERP and GLBL should be inspired. Tepper's recent stake in ABY might have such inpirational learning purpose besides the good investment case.

http://finance.yahoo.com/news/affiliate-spains-abengoa-files-u-202717089.html

 

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I guess Tepper won't get paid from two companies. I wonder if he feels like all of us.

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