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Pattern Energy Group Inc. (PEGI)

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I've been enjoying my 20% allotment to PEGI.   I'd like to add more, but am afraid to put all the proverbial eggs into that basket.  

I see there are other yieldcos & similar companies to PEGI.  Is there another that could be considered nearly as stable as PEGI?

Thanks

Matt

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8 hours ago, sunnypease said:

I've been enjoying my 20% allotment to PEGI.   I'd like to add more, but am afraid to put all the proverbial eggs into that basket.  

I see there are other yieldcos & similar companies to PEGI.  Is there another that could be considered nearly as stable as PEGI?

Thanks

Matt

BEP is the oldest and largest and most stable yieldco I found when doing a listed yieldco inventory a while ago. Sponsor is BAM who is bidding on TERP now. NEP has an excellent sponsor in NEE, but did not avoid being dragged downed hard in the yieldco crash. Basically only BEP had a soft landing of the US yieldcos. Then there are many Canadians too, some of them double listed in US. Maybe NPI.TO is the largest and most stable one of those. Then there are plenty with slightly distressed sponsors, but not to the extent of TERP, GLBL and ABY, that offer better yield. RNW.TO, NYLD and maybe PEGI are examples of such yieldcos. The more risk from e.g. sponsor weakness, stretched BS or excessive CAFD use for dividend the higher yield is usually offered. I would suggest a basket of yieldcos to diversify exposure (energy source, geographies etc.) and risks (financial, sponsor etc.) and get a mix of yield levels.

Edited by explo

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Hi Explo -

  Thank you very much for the list.  While reading up on BEP on SeekingAlpha, I learned that these distributions from the non-US based companies send out a K1 form.  Yuck!  I'm a US citizen.  So much for passive income. I guess PEGI is the same.

  I just read about the yieldco crash.  https://www.greentechmedia.com/articles/read/the-yieldco-boom-and-bust-the-consequences-of-greed

6 hours ago, explo said:

Then there are plenty with slightly distressed sponsors, but not to the extent of TERP, GLBL and ABY, that offer better yield. RNW.TO, NYLD and maybe PEGI are examples of such yieldcos.

  How is PEGI slightly distressed?  

Thank you-

Matt

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I'm actually not sure about PEGI distress. I think its sponsor Pattern Energy might have some issues causing PEGI to have higher yield than say NEP, but I'm not sure what the cause of the higher yield is.

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4 hours ago, explo said:

I'm actually not sure about PEGI distress. I think its sponsor Pattern Energy might have some issues causing PEGI to have higher yield than say NEP, but I'm not sure what the cause of the higher yield is.

PEGI is doing worse since their material controls have been on rocks with the disclosure made, lot of people had sold.

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14 hours ago, sunnypease said:

Hi Explo -

  Thank you very much for the list.  While reading up on BEP on SeekingAlpha, I learned that these distributions from the non-US based companies send out a K1 form.  Yuck!  I'm a US citizen.  So much for passive income. I guess PEGI is the same.

  I just read about the yieldco crash.  https://www.greentechmedia.com/articles/read/the-yieldco-boom-and-bust-the-consequences-of-greed

  How is PEGI slightly distressed?  

Thank you-

Matt

Since you quoting article from the mid- year I quote the same author from 9 days ago

http://www.altenergystocks.com/archives/2017/01/ten_clean_energy_stocks_for_2016_year_in_review.html

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I have submitted my perspective on yieldcos to SA. It is my analysis of IR and impacts. I have not seen anything similar out there so I hope it will be published. 

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17 hours ago, odyd said:

I have submitted my perspective on yieldcos to SA. It is my analysis of IR and impacts. I have not seen anything similar out there so I hope it will be published. 

Very much looking forward to your article.  Thank you for putting the time & energy into researching & writing!

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6 hours ago, explo said:

Great article odyd!

Thanks, Explo,

I like prospects of yieldcos now. Seeing that PEGI is selling notes, I am curious now what sort of IR they will get for them. I think this issue could be one of first of those. They may do some in Canada and Japan for their projects there.

Today was a pretty intense day for them, ABY, NYLD and NEP went surprisingly up. Typically they trade rather dry,

Hopefully things are turning

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NEP has had a really nice run the past month and it look like it was a good opportunity to get in there a month ago. At the same time for example FSLR at $28 proved to be a short-term hold. We are getting closer to the point were I might move back some to yieldcos again, but I think it is still too early for me, but I'll keep closer watch on the transition opportunity.

My portfolio is a bit different than yours were my stocks part now is a small "mad money" part, which is why I don't see the low risk of yieldcos as the long-term base and income tool of it, but rather as a tactical tool to park money in when it is time to take profits on more volatile stocks.

Edited by explo

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I think what may be going on is that some people have access to the pvinsights report one day before everybody else.

Back in December I saw the stocks tank "for no reason" (green market day, no big prior runup) on a Tuesday, and on Wednesday it was revealed that module prices had dropped > 2%.

Yesterday the Chinese solars went up massively.  Jinko solar up over 7% at one point of the day.  Today the pvinsights report shows no further erosion in module prices.  Ironically this was due to the dollar getting weak which would be a negative for the Chinese solars vs us solars.

Just a theory.

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20 hours ago, sunnypease said:

Is this good?  This is a debt offering?  Nothing in that article about the interest rate paid.

Hi Robert -

  I read your article, which was very helpful, but I still don't fully understand how the interest rate is determined.  

  By an auction / bidding process?

  If these are traded on the open market, can the IR change?  If so, can a private investor see these changes?  It would seem very important to the valuation of the issuer (PEGI)

  How can we see what the interest rate will be?  Someone in your article mentioned a CUSIP id for a note, but I don't yet see a CUSIP for these notes.  

  Aha.. now I see this is a proposed offering.  So we will see later an actual offering?

Thank you -

Matt

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Rates are negotiated, and managed between parties. Lender wants to make money and the company wants to earn positive irr. Selling debt is a function of the markets upon its issuance.

Sent from my HTC One_M8 using Tapatalk

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PEGI closed up on Scott Pruitt day.  A good sign.

5 hours ago, odyd said:

Rates are negotiated, and managed between parties. Lender wants to make money and the company wants to earn positive irr. Selling debt is a function of the markets upon its issuance.

Does PEGI disclose their debt costs & senior note interest rates at some point?

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38 minutes ago, sunnypease said:

PEGI closed up on Scott Pruitt day.  A good sign.

Does PEGI disclose their debt costs & senior note interest rates at some point?

do you research any of your questions?

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According to news, IR hikes will take place three times this year. That could bring as much as 1% in total at the high end and perhaps 0.75% only at the bottom, which still covers what I have written in my article. We will probably see selling, in yieldcos today. 

I am waiting for the dividend from PEGI which is expected by the end of the month. Mathematically speaking buying CSIQ with is probably more logical than PEGI due to a higher appreciation for equity. 

I still do not have any accurate indication what 2017 will look like for Chinese companies. The insulting article about CSIQ not surviving 2017 has no facts and facts are needed.

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20 hours ago, odyd said:

do you research any of your questions?

I looked into it, you were right.  Duh.  Just look at past press releases.  

It looks like last time they issued senior notes, it went through 3 phases:  proposed, priced, & closed.  Last time it went through those 3 phases in just a week with a rate of 4%.

Sorry if I ask dumb questions sometimes.  There must be other newbies here too though. :)   If we all understand, can make good investment choices.  I think our goals are similar:  to make a little money meanwhile benefit the planet with clean energy.

Matt

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Hi Matt,

Thank you for your reply.

Well, as you probably know by now, very few people take part in the discussions. Solar has taken a toll on many, but this was never a big chatter box. Mostly people read.

BTW, I did not want to offend you, and I hope I did not. I guess I am used to people generating opinions on their research, so some of the questions are basic, this is why I asked if you invest any time to research, as I am used to exchanging points of view rather than how to find facts, etc.

I am relatively busy, and I frankly do not have time to respond to those type of items. I expect anyone who wants to invest in own their investment, meaning why they do. Ther are thousands of posts here that you can see how we have evolved. I am disappointed that most people gave up, but I am not surprised. Solar industry growing at 25% a year on average from 2010 delivered only in 2013/ 2014 for investors and took back everything or nearly everything it gave.

It is tough to make money here and subsequently, tough to even find the energy to get the forum active or alive.  Sorry to disappoint.

 

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Hi Robert -

 I've looked over past posts here & I see that time & time again you have been very forward with your thinking & thoughtful for the community.  Early during SUNEQ meltdown, you warned readers to close their positions.

 I'm sorry that I ask too many questions sometimes.  What I started doing is going back & deleting ones that didn't seem to add or spark any worthwhile conversation.  The basic problem is that I spend too much time on this stuff.  And I'm completely new to investing.

 But slowly, after reading more & more seeking alpha articles & notes from Credit Suisse, I'm learning more about what numbers are important. I need to focus more on that & less on the daily movement of FSLR.  I realize it is a lot of work.  I'd be happy to help out with the research for anyone here.

 It's too bad it's been a rough road for many.  It's been bumpy for me too, in a short 6 months I've lost money on FSLR as a long and as a short.  But it does not matter.   Clean energy is certainly the future.  If some of these companies can make moats, they'll do ridiculously well.

 Once people realize the change is happening, it's going to be a stampede.  It looks like there was a taste of that in the early days of solar stocks.

Matt

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4 hours ago, sunnypease said:

Once people realize the change is happening, it's going to be a stampede.

Be careful your optimism doesn't cloud your judgment there.  I used to think exactly the same thing, but have come to recognize the reality of business models and conditions.  You recognize the caveat about a company needing a moat.  So we all need to ask ourselves, what do our solar companies do, and do they have a moat?  First and foremost, they produce panels.  For that, they do NOT have a moat.  Yes, FSLR has a different technology than the others, but it doesn't give them enough of a price or quality advantage to truly differentiate them from the others.  Panels will continue to be commodities, barring some unforeseen new miracle technology breakthrough by a single company.  What's the other thing solar companies are now at least trying to do?  Not just sell panels, but sell the electricity they generate.  But building large-scale PV farms is very capital-intensive, and we've already seen with CSIQ that returns on those projects have dropped, in some cases dramatically.  No cash cow there, at least not any more.  Rooftop solar still has MUCH more room to grow, but our CN4 are not in that business currently, and it may be too late to get into it, as other companies currently have the market cornered.  So while solar will undoubtedly be a huge boon to the planet and to energy consumers, the way it's evolved makes me doubt very seriously it will ever be a huge boon to energy investors, at least not to the buy-and-hold-for-the-home-run crowd. 

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PEGI priced their notes at 5.875%   For 350 million USD due 2024.   

Market seems to be happy with that for now.

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PEGI priced their notes at 5.875%   For 350 million USD due 2024.   
Market seems to be happy with that for now.

You have to look at the rating and understand this is an expense. It is about one percent higher that I would hope but it is good

Sent from my HTC One_M8 using Tapatalk

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It is encouraging to hear you say it's good.  

Almost 50% higher borrowing costs though.  I need to look at the PPA trends.  For solar they are going down & FSLR / SPWR say uneconomical.  I hope the same is not happening for wind.

Do you know what sort of IRR Pattern has been having on their wind farms?   I googled & looked through a CC transcript but nothing jumped out.  Does that sort of number need to be calculated?

Thank you-

Matt

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3 hours ago, solarpete said:

 So while solar will undoubtedly be a huge boon to the planet and to energy consumers, the way it's evolved makes me doubt very seriously it will ever be a huge boon to energy investors, at least not to the buy-and-hold-for-the-home-run crowd. 

Hi Pete -

  Your thoughts make a lot of sense.  

  Do you think that once a company has a certain scale that it will be difficult for new entrants to compete?  Or is this a market where anyone with a billion dollars can set up shop & start selling?

  I'm not normally supporting FSLR, but if they can somehow create CdTe panels with a lower $/W than cSi, then that'd be a moat.  Everyone, including a few investors here, would be scratching their heads wondering how they did it.

-Matt

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