The Texas Energy Crisis and Fixed Income: Measuring Risk and Opportunity

Highlights

• Loomis Sayles credit researchers believe that integrated power producers (IPPs) in the state of Texas will survive the Texas energy crisis given their generally strong balance sheets and large liquidity facilities.
• The crisis could delay a high yield IPP’s timeline to investment grade as rating agencies reassess the market.
• In the long run, IPPs are likely to benefit from new customers seeking dependable retailers with a good brand, even if that comes at a premium cost. As important, Loomis Sayles credit researchers believe the IPPs could realize a new source of income as an incentive to keep assets alive for reliability purposes.