One of the first pieces of advice a retail stock investor receives after opening their first brokerage account or downloading the Robinhood app is not to try to “time the market.”
But in corporate finance – especially during weak markets – timing is everything. If a window of opportunity opens after a period of volatility, you go for it.
That, presumably, is what the CFOs and treasurers of Sunnova, Loanpal and Mosaic thought when the asset-backed security market appeared to calm down enough to support issuance of solar ABS.
In less “interesting” times, bookrunners Credit Suisse, Goldman Sachs and Deutsche Bank might have advised their clients against piling into the market on top of each other, for fear of overwhelming investors. But no one knows how long the window will stay open.
Another timing choice that has come under scrutiny is GenOn Energy’s decision to put 2.4 GW of thermal assets in PJM Interconnection on the block, not only in the middle of a pandemic and possibly a recession, but as the capacity auctions they rely on for more than 70% of their gross margin face huge uncertainty.
“When a generalist, global business paper posts to its homepage an article with the acronym ‘MOPR’, you know something is up,” wrote Rhynland’s Patrick Verdonck after London’s Financial Times covered New Jersey, Maryland and Illinois’ potential exit from the capacity market.
Some have speculated that GenOn will try to drag out the sale process until a capacity auction finally takes place, but others think the former creditors who now own the company just want to offload the assets before things get even worse.
“The only better time to sale a massive fleet of thermal generation in PJM would be yesterday,” commented retail energy specialist Preston Ochsner. “Same will hold true tomorrow and for all of the tomorrows after that.”