JPMorgan Econ FI-Electric Utilities Power Sparking Credit PCG Investor D...

North America Credit Research26 May 2023J P M O R G A Nwww.jpmorganmarkets.comContentsPG&E Corp. 2023 Investor Day2JULI Snapshot3IG Funding Guidance4IG Issuance6IG Relative Value7ESG Ranking10IG Financial Metrics11Ratings Action12IG Maturities13HY Relative Value14Generation and Forecasts16Power Curves and Spark Spreads17US Credit ResearchKevin L Kwan AC(1-212) 270-9455kevin.l.kwan@jpmorgan.comLan Kuang(1-212) 834 4445lan.kuang@jpmchase.comJ.P. Morgan Securities LLCJULI Snapshot24-May1 WkYTDJULI157-47Non-Fin152-36Utes157-19 HoldCo17406 OpCo151-211 GenCo203-222Source: J.P. MorganJULI vs JULI Utes010200100200Jun-21Sep-21Dec-21Mar-22Jun-22Sep-22Dec-22Mar-23Diff (R Axis)JULI (L Axis)JULI Utes (L Axis)Source: J.P. Morgan•Upcoming Events and Recent Publications•JPM Research and Rating Agencies Webinars: - S&P: Thursday, June 1st: 10:30AM -12:00PM ET - Register here - Fitch: Wednesday, June 7th: 10:30AM - 12:00PM ET - Register here•PCG Investor Day Takeaways•CPN: Steady 1Q23 Headline Results; Maintain OW•VST: In-line 1Q23 Results; Energy Harbor Acquisition Expected to Drive Additional Upside •NEP: Pipeline Sales and IDR Suspension Underscore Focus on Simplification: Upgrading to OW on Relative Value•AES: A Strong Renewable Growth Story - Takeaways from 2023 Investor Day; Maintain Overweight.•CWEN: In-line 1Q23 Results, Enhanced drop-down visibility in 2H23•We provide key takeaways from this week˖s PCG Investor Day beginning on page 2 of this report.•Over the past week, Utilities tightened 1bp versus a 4bp tightening in the JULI index and a 3bp tightening in the JULI Non-Financial Index. Utility GenCos tightened 2bp, OpCos tightened 2bp and HoldCo's tightened 0bp. Secured OpCos tightened 2bp and unsecured OpCos tightened 1bp. YTD, Utilities widened 9bp versus a 7bp widening in the JULI index and a 6bp widening in the JULI Non-Financial Index. Utilities are currently trading 0bp tight to the JULI index at 157bp and OpCos are trading 23bp inside of HoldCos at 151bp.•Issuance slowed down this week. This week, there was $950mn new issuance from AEP TX and AEE IL. We estimate YTD issuance of $74.3 billion compared to our FY23 forecast of $95 billion.•Rating actions. This week, Moody˖s downgraded System Energy Resources (SERI)˖s FMB to Baa2 from Baa1; assigned Ba1 issuer rating, and kept outlook at negative. This is driven by ongoing disputes with several regulatory commissions regarding SERI˖s rates, which will reduce the company˖s cash flow going forward. •The last natural gas active contract traded at $2.34/mcf. Natural gas fell by -9.7% over the last week. The EIA reported a 99 Bcf net build last week, which was bullish compared to Bloomberg consensus estimates of 100 Bcf. The build brought working gas storage volumes to 2,240 Bcf.•Week over week, the UTY index fell by -1.46% compared to the S&P Utilities Index which fell by -1.46% and the S&P, which fell by -1.05%.Outperformers: SWX (+1.2%), AWK (+0.5%), OTTR (+0.4%).Underperformers: ETR (-4.2%), D