• ‘Almost unlimited demand’ for investment-grade credit issuance
  • David Bronicheski speaks at Bloomberg Canadian FI Conference

Investment-grade Canadian companies that want to issue debt will be welcomed with open arms by investors, according to Algonquin Power & Utilities Corp.’s chief financial officer.

"It really is the halcyon days for the power and utility sector," David Bronicheski said at the Bloomberg Canadian Fixed Income Conference in New York. "It is almost an unlimited demand it seems for solid, investment-grade fixed-income credit."

Canada’s utilities are facing less competition than their neighbors to the south as hydro power accounts for more than half of Canada’s electricity supply, leaving fewer players and less of a chance for solar panels and wind turbines to pressure profits.

The U.S. market plays a "key role" in Algonquin’s financing plans, particularly concerning mergers and acquisitions, Bronicheski said. Algonquin earlier this year agreed to buy Missouri’s Empire District Electric Co. for $1.5 billion in cash and went to the U.S. market for financing. They are considering taking advantage of the 144A market as well, he said.

Utility companies pursuing acquisitions have led to more than 70 transactions raising money in the fixed-income market, surpassing last year, Bronicheski said. Algonquin is committed to maintaining its BBB investment-grade credit rating as it considers debt issuance in Canada or the U.S., he said.

Although there has already been quite a bit of consolidation in the sector, Algonquin is watching for more acquisition opportunities, Bronicheski said.

"There’s always going to be more acquisitions to come," he said. "We’re certainly keeping our oars in the water."

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