Quick Take: AboitizPower gets loan for renewables project and 2 more market updates
Federal Open Market Committee (FOMC) [link] meeting notes suggest that the US Fed will not be quick to lower interest rates. There had been a growing hint of optimism that recent positive inflation trends would lead the US Fed to at the very least signal that a pause was in order, but the minutes splashed a cold cup of water on those thoughts.
MB Quick Take: This is pretty consistent for the toxic relationship between the US markets and the Fed. One ounce of good news gets the market looking ahead to brighter days, prompting the Fed to dash hopes and remind us that the journey to fight and kill the inflation flare-up will take more time and more patience. It’s a cycle that’s repeated a few times already, and given the market’s tendency to get caught up in waves of positivity, it’s bound to happen again before this whole mess is fixed.
AboitizPower [AP 34.7 0.9%] [link] received a P20 billion loan from Landbank to fund AP’s renewable energy projects. The renewable energy investments will be made through AP’s subsidiary, Aboitiz Renewables Inc., and will be a component of AP’s plan to spend P190 billion over the next 10 years to add 3.7 gigawatts of renewable energy to the Philippine grid.
MB Quick Take: A big loan to support an ambitious spending goal. AP has so many tailwinds right now that shareholders must be just waiting to see how management puts it all together. It’s early, but as we saw with the previous administration, time can run out quickly on even the most obvious of corporate/government love teams. Moves like this tell me that AP is not satisfied to wait.
Vivant Corporation [VVT 12.8] [link] to purchase 100% of the shares of a bulacan-based solar power plant owner/operator called San Ildefonso Alternative Energy Corp. (SIAEC) for an estimated US $5 million. VVT is buying SIAEC from Cleantech Global Renewables Inc., with the final per-share price to be adjusted based on Cleantech’s year-end financials. VVT said that the acquisition is meant to increase VVT’s renewable energy footprint, and “generate returns” for shareholders.
MB Quick Take: Operating renewable energy projects are great little acquisitions. I don’t know VVT’s plans with its RE portfolio, but the management team at least enjoys the option of trying to roll up a bunch of these types of projects into a REIT if they sought to monetize the income stream and keep the acquisitions train moving. Projects can only be “REITed” if they’ve been operating for at least 3 years.
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Merkado Barkada's opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.
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